Since the start of the Pandemic, more forms of installment payments have been blown up. Not only in the sense of a bubble but also the general popularity. Initially, this is something that made financial sense. It’s also very enticing with 0%. However, 4 in 5 United States consumers use Buy Now Pay Now on everything and most shoppers say this is a system that can replace the traditional methods of payment.

“It’s hard to buy anything anymore without being asked if you want to pay over time.”

Marshall Lux, a fellow at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School, said.

Many consumers use the system when shopping at online retailers such as Walmart, Amazon, and Target. Many providers are introducing browser extensions to reach the demand.

“Three years ago, people talked about Peloton bikes, now people are buying sneakers, jeans, socks. When people start buying household goods on credit, that signals a problem.”

Marshall Lux said.

Nearly 70% of those using the system admit they spend more than they would if they paid everything up front, according to LendingTree. 42% of consumers have taken out a loan using the service and have made a late payment.

“They won’t come for your sneakers, the fact that you can buy something and not know what happens when you default - for the average person working paycheck to paycheck, this becomes a problem. It feels a little Wild West-y to me.”

Marshall Lux said.

An inquiry has been opened into popular buy now, pay later programs by the Consumer Financial Protection Bureau. The watchdog claims their main priority is how these programs impact consumer debt as well as what consumer protection laws apply and how the payment providers harvest data.

“Buy now, pay later is the new version of the old layaway plan, but with modern, faster twists where the consumer gets the product immediately but gets the debt immediately, too.”

Rohit Chopra, CFPB Director said.