From Swipe to Split: BNPL Takes Over Credit Cards in the U.S.
The traditional way of using credit cards—paying the full statement balance or revolving with high interest rates—is rapidly being replaced by a more flexible model: Buy Now, Pay Later (BNPL).
What is BNPL, and why is it growing?
BNPL is a payment option that allows consumers to divide the cost of a purchase into interest-free installments, usually offered at the point of sale.
The main goal is to eliminate the need for revolving credit, which often carries high interest rates and leads to problematic debt.
Companies specializing in BNPL—such as Afterpay, Klarna, and Affirm—have captured the attention of American consumers, especially younger Millennials and Gen Z users who value greater financial control and transparency.
According to Forrester Research, the BNPL market in the U.S. is expected to surpass $100 billion in transactions by 2025.
The Integration of BNPL into Traditional Credit Cards
Recognizing BNPL’s growing popularity and competitive pressure, traditional credit card issuers are now incorporating interest-free installment options directly into their products.
This includes major players such as Visa, Mastercard, American Express, and several issuing banks.
This integration allows consumers to make purchases with their credit cards, and instead of paying the full balance or entering into high-interest revolving credit, they can choose to split payments into fixed installments—often interest-free or with much lower rates than traditional credit.
This significantly increases the appeal of credit cards and offers greater flexibility—especially during periods of high inflation and economic uncertainty.
Economic Impact on Consumption and Debt
Stimulating consumption
Easier access to interest-free installments tends to stimulate consumer spending, increasing immediate purchasing power.
For the U.S. economy—where household consumption represents nearly 70% of GDP—this could serve as a meaningful economic boost.
Changing financial behavior
By spreading payments over time without added costs, BNPL can help consumers avoid revolving credit, which is often the primary source of problematic debt.
On the other hand, this ease of use may lead to more impulsive spending and the accumulation of installment debt that some consumers may struggle to repay.
New risks for issuers
For banks and card issuers, BNPL presents a challenge in risk management. The model may reduce traditional interest income, which remains one of the main sources of revenue for financial institutions.
Additionally, the risk of default still exists, requiring enhanced credit analysis tools and better collection strategies.
Repercussions in the Financial and Regulatory Landscape
Competition and innovation
The battle for customers between BNPL-focused fintechs and traditional banks is accelerating financial sector innovation.
Hybrid products are emerging, combining the reach and security of traditional issuers with the speed and consumer focus of fintechs.
Regulation under discussion
U.S. regulatory agencies such as the Consumer Financial Protection Bureau (CFPB) have begun to assess BNPL’s impact on consumer debt and transparency.
Although many BNPL transactions are not categorized as traditional loans, there are concerns about hidden risks, abusive practices, and the lack of clear information for consumers.
Future Outlook: BNPL as the New Standard in Consumer Credit?
Given the rapid growth and adoption by major card issuers, BNPL has the potential to become the new payment standard in U.S. retail.
With commerce becoming more digital and consumers demanding fast, flexible experiences, the “buy now, pay later” model offers a solution that aligns with modern spending habits.
Additionally, BNPL could financially include millions of Americans who currently lack easy access to traditional credit.
On the other hand, experts warn of the need for balanced regulation that protects consumers, ensures financial institution sustainability, and prevents the formation of a new credit bubble.
For consumers, it offers a chance to better manage cash flow and purchase goods more easily.
For issuers and investors, it’s time to rethink strategies and balance innovation with caution.
For regulators, the challenge is to create an environment that fosters innovation without exposing consumers to unnecessary risks.