Some, not all, BNPL lenders can get predatory with interest and fees if you don't pay the entire balance in 4 payments. For instance, Affirm strikes deals with retail partners that determine the interest rate (if any) on longer payment plans, which can go up to 30% APR vs. a 25% APR mean credit card rate for 650-700 credit scores. That variability also isn't always transparent to the buyer, who might not expect any interest if they used Affirm with another business that didn't require it. Zip, which is compatible with any payment that accepts Visa, charges a flat $1 payment fee per transaction and then a variable late-payment fee that depends on your state. Since more than a third of BNPL users in 2021 missed at least one payment - more than half of those under 40 did, and age demos make up a majority of BNPL users - these fees and rates are lucrative to the lenders.[1]

BNPL lenders don't tend to check a buyer's credit, and those that do don't pull a full report, so it's more accessible than a credit card. But successful payments to a BNPL also don't get reported up to credit agencies, and missed payments can be (at least a third and up to three-quarters of those who missed a payment took a subsequent credit score hit), so paying down a BNPL plan exposes the buyer's credit score to risks with no potential benefit. Since the lack of credit check makes BNPLs attractive to demographics with poor credit scores - young, poor, and underbanked - even responsible usage of BNPLs do nothing to improve those scores.[1][2]

Like with many low- or no-friction payment tools, BNPLs can facilitate overspending by people who already have poor credit, and the consequences of doing so can be dire to the overspender with few or no consequences to the BNPL lender. Planning a BNPL purchase isn't a problem, but point-of-sale BNPL options and BNPL instruments in debit-card form factors make debt an impulse buy in ways that credit cards can't do in some jurisdictions because they face regulations that BNPL lenders don't (yet[3]). People under the most pressure are buying necessities with BNPL and paying the BNPL debt down with credit card debt, a sort of worst-of-all-worlds scenario.[2]

BNPL usage has only increased with inflation and spread to necessities, which in the long run benefits only BNPL lenders. BNPL users are juggling a mean BNPL balance of $665.[2]

Another thing that raises hackles about BNPL lenders is how often they promote their services as a social good by pointing out how they avoid the predatory practices of credit cards. As for-profit institutions this can ring as dissonant to people who've experienced stress from debt, because it can suggest that providing low-friction debt to people who can't afford higher-friction debt is a moral imperative. The cringe of it expands when such platitudes are in the company's report to shareholders about its financial successes.[4]

And on top of everything, the business model for BNPLs existed only with low/near-zero interest rates. Their value as businesses is evaporating as they face actually having to pay for the money that the lenders themselves are borrowing to fund BNPL transactions.[5]

1: https://www.creditkarma.com/about/commentary/buy-now-pay-lat...

2: https://www.creditkarma.com/about/commentary/consumers-rely-...

3: https://www.reuters.com/business/finance/us-consumer-watchdo...

4: https://www.klarna.com/assets/sites/15/2022/02/27195201/Klar...

5: https://www.reuters.com/technology/buy-now-pay-later-busines...