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Buy now, pay later: Policy measures to mitigate consumer risks from evolving business practices

“Buy Now, Pay Later” (BNPL) is an innovative credit product that allows consumers to split up the cost of a retail transaction (usually between $50 and $1,000), traditionally into four interest-free installments repaid over the span of six weeks. Seamlessly integrated into the online shopping experience, the product is promoted as a fast, convenient means for consumers to manage their cash flow and avoid high-cost debt.

Unfortunately, the “free and seamless” nature of BNPL can pose unforeseen risks for consumers.  BNPL currently falls within a legal gray area, with few specific rules that apply to the product. As a result, consumers have little protection from the practices that may cause them harm.  This report offers policy recommendations that aim to preserve the benefits of BNPL while addressing the risks that can harm users.