'Buy Now, Pay Later' is Expanding Fast, and That Should Worry Everyone (techcrunch.com) 97
An anonymous reader shares a report: When Nigel Morris tells you he's worried about the economy, you listen. As industry observers know, Morris co-founded Capital One and pioneered lending to subprime borrowers, building an empire on understanding exactly how much financial stress the average American can handle. Now, as an early investor in Klarna and other buy-now-pay-later companies like Aplazo in Mexico, he's watching something that makes him deeply uncomfortable.
"To see that people are using [BNPL services] to buy something as basic and fundamental as groceries," Morris told me on stage at Web Summit in Lisbon this week, "I think is a pretty clear indication that a lot of people are struggling." The statistics back up his unease. Buy-now-pay-later services have exploded to 91.5 million users in the United States, according to the financial services firm Empower, with 25% using the services to finance their groceries as of earlier this year, according to survey data released in late October by lending marketplace Lending Tree.
These aren't discretionary purchases -- the designer bags and latest Apple headphones that BNPL was marketed for originally. Borrowers aren't paying it all back, either. According to Lending Tree, default rates are accelerating: 42% of BNPL users made at least one late payment in 2025, up from 39% in 2024 and 34% in 2023.
"To see that people are using [BNPL services] to buy something as basic and fundamental as groceries," Morris told me on stage at Web Summit in Lisbon this week, "I think is a pretty clear indication that a lot of people are struggling." The statistics back up his unease. Buy-now-pay-later services have exploded to 91.5 million users in the United States, according to the financial services firm Empower, with 25% using the services to finance their groceries as of earlier this year, according to survey data released in late October by lending marketplace Lending Tree.
These aren't discretionary purchases -- the designer bags and latest Apple headphones that BNPL was marketed for originally. Borrowers aren't paying it all back, either. According to Lending Tree, default rates are accelerating: 42% of BNPL users made at least one late payment in 2025, up from 39% in 2024 and 34% in 2023.
We've seen this pattern before. (Score:5, Interesting)
The last great recession was due to precisely this sort of spending pattern plus a collapse in payment. Banks may be healthy, for now, but they can't keep lending forever with no recover. This is not a good sign.
Re: We've seen this pattern before. (Score:2)
Re:We've seen this pattern before. (Score:5, Interesting)
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^^^^^^this, 1000%
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There are other items which will compound the problem. Student loan debt. When those debt defaults start happening, those are going to have a major impact, on par with the derivatives back in 2008. Then, there is the fact that people are trying to stuff cryptocurrency in everything, so if BTC really tanks, everyone pays for it, be it peoples' pensions, 401ks, etc.
Finally, there is one thing that people don't realize, which will cause major business failure: The cloud cliff. In the past, if a company ha
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Uhm, no.
Going into debt to buy groceries is not a pattern that causes anything. That IS a recession in full swing. These credits may just delay the point of collapse a bit.
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Your apparent assumption is that buying groceries on debt is the first step of the process.
My 30-year-old son is a case study. He recently called me and asked about these BNPL services. He was in a pinch, trying to figure out how to pay his next month's rent. Pretty serious stuff, right? No, his spending problem began years ago. He and his wife have their $400 smartwatches and their $1,200 Samsung phones. They got them "free", you know, with their cell service (that they're paying $400 a month to maintain).
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Way to be an asshole.
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My god!
I hope that my son (currently 9 yrs old) can manage to avoid that lifestyle, as I will not be here to guide him to prevent it
Good luck to you and yours, my friend.
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Make Money Fast! (Score:2)
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If the article is correct, the way to make money is to figure out when this is going to catch up with the BNPL companies and then short them. Good luck timing it.
That 42% late payment rate, though, is likely more a feature than a bug. Late payments mean more fees.
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The way to make money on it is to buy stock in those companies. Or stock in their customers, who are selling more stuff.
If you manage to get the timing anywhere close to right you can sell that stock and then buy real estate at foreclosure sales.
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The only thing I care about is how I can make money on this.
How can you make money on people defaulting on their bills?
Flip foreclosures.
Flipping high value items people list cheaply on Facebook Market out of desperation.
Open your own pawn shop / "we buy gold" business.
Get a job as a debt collector.
Become a repo man.
Write a "How to Survive Crippling Debt" book.
Re: Make Money Fast! (Score:1)
Don't forget lobbying and consulting.
Loan sharking.
Underground gambling.
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Hm OK, followup question:
Is there a way I can make money on this without doing, like, actual work.
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That's easy. Just raise the interest rates. Everyone understands that these reflect the default risk.
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Quicker than Apple or Google Pay?
Re:Nah (Score:4)
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BNPL groceries = groceries on credit cards (Score:3, Insightful)
People buying essentials on credit has been around for a very long time.
It's never a place you want to be, but it beats starving or freezing to death.
Re:BNPL groceries = groceries on credit cards (Score:4, Insightful)
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Pretty much yes.
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or use a debit card
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Fuck debit cards. A: no rewards.
The PayPal debit card pays 5% on the category of your choosing - Groceries, restaurants, fuel, etc.
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I've always gotten rewards on my but they were a lot better back when i signed up for it about 20 years ago
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This.
Credit options are usually convenient, and often have other benefits like interest free periods, cashback or airmiles etc. Lots of people use them who could easily afford to pay up front.
If you end up paying the same, but get some kickback or defer payment until later why wouldnt you?
A lot of the users aren't people who can't manage their money, it's the opposite - people who know how to manage things optimally.
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Re: BNPL groceries = groceries on credit cards (Score:2)
My local supermarkets, at least the ones where I shop, don't allow purchases with credit. This is irritating AF even though I have the money in the bank because I get a percentage back.
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>This is irritating AF even though I have the money in the bank because I get a percentage back.
The percentage you get back is a small part of what goes into the costs that the credit card industry charges consumers and merchants.
If no credit cards offered any kinds of rewards, the credit card companies could lower consumer and merchant fees and interest rates and still make the same amount of money.
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My local supermarkets, at least the ones where I shop, don't allow purchases with credit.
For a lot of Americans, "local supermarket" means Walmart, and they take everything.
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There's apparently only one large American supermarket chain that DOESN'T take credit cards, WinCo.
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There's apparently only one large American supermarket chain that DOESN'T take credit cards, WinCo.
I do most of my shopping there, at Grocery Outlet, and at Costco. I actually do more shopping at grossout, because they are the closest thing that doesn't suck. We have a local market and mini-market, and I'm not a big fan of either one. (The market is somewhere around "OK", the mini market is disappointing.) I got Costco's card honestly just to get fuel quicker as the card is a membership card, and it's convenient for me to stop in there on my way to work.
Winco is an employee-owned co-op, and their pricing
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Only on Slashdot can you get modded down for pointing out that there are a lot of Walmart stores. [reddit.com]
And that map is from like 6 years ago, so there's probably even more than what's shown. So my point still stands, if none of your grocery stores take credit cards, where out in BFE do you live that there isn't even a Walmart?
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or freezing to death.
See, what you do is put your Bitcoin heater [slashdot.org] on credit, then use the Bitcoin it mines to buy the groceries.
Obligatory meme image. [wikipedia.org]
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Re:BNPL groceries = groceries on credit cards (Score:5, Insightful)
I'd love to see what else is on the CC bills for people that are buying essentials on credit. I'm not trying to deflect from a very real issue but more information is needed to paint the true picture.
I know a number of people under water with CC debt and are charging their groceries. I want to feel bad for them but then they are also charging starbucks 6 days a week, gas for their trucks, 4-5 streaming services, and also door dash a couple of days a week. Toss in a new iPhone/airpods/tablet throughout the year. They blame their CC bills being high on car repairs and refuse to acknowledge that they're dieing the death by a thousand cuts.
It sucks that people like this are more common than not because they're eclipsing the faction of people that are legit screwed and are in an awful situation like this.
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It sucks that people like this are more common than not because they're eclipsing the faction of people that are legit screwed and are in an awful situation like this.
Social media amplifies anecdotes about people being bad with their money, giving the impression that they're eclipsing those who are genuinely struggling due to low income, but the numbers don't lie. Half of all income earners bring home less than the US median income, which is what makes it the median income.
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Half of all income earners bring home less than the US median income, which is what makes it the median income.
This made me laugh. Duh! This is always true. But being true doesn't make it a bad thing. Luckily, the median income in the US ($83K) is plenty to live on, in all but the most expensive markets like New York, San Francisco, and Los Angeles.
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The median income in New York, San Francisco, and Los Angeles is higher than $83K. At least I hope it is.
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Nope, the median income in NYC is $73K. https://finance.yahoo.com/news... [yahoo.com]
Re: BNPL groceries = groceries on credit cards (Score:2)
Median refers to everybody.
Some people are hopeless, yes (Score:4, Insightful)
I'm doing fine now, but grew up in a poor family. We were constantly judged for it. I recall hearing from a classmate that we couldn't be friends because his parents told him I would steal from him.
And yes, if you're seen having anything even vaguely inessential or middle-class coded, you're judged for that, too. Taking your kids to get ice cream once in a while demonstrates how wasteful you are. Or my absolute favorite was someone trying to shame me for wearing nice clothes one day. I was on my way to a job interview. So which is it, am I too stupid and lazy to lift myself up by my bootstraps, or am I to only get work at places that will hire someone in rags?
All of which probably helps explain why I can be extremely contemptuous about this sort of thing. People are complex, and the finances of many people at the edge of poverty are largely based on interpersonal relations. Without a fair amount of personal detail you simply won't have a lot of the time, you really just don't know how responsible they're being.
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Re:BNPL groceries = groceries on credit cards (Score:5, Informative)
People buying essentials on credit has been around for a very long time.
Longer than most think.
You load sixteen tons, what do you get?
Another day older and deeper in debt
Saint Peter, don't you call me, 'cause I can't go
I owe my soul to the company store
-Sixteen Tons, Tennessee Ernie Ford
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Longer than most think.
You load sixteen tons, what do you get? Another day older and deeper in debt Saint Peter, don't you call me, 'cause I can't go I owe my soul to the company store
-Sixteen Tons, Tennessee Ernie Ford
Sixteen Tons, Merle Travis, 1947 Covered by Tennessee Ernie Ford, 1955
Why do people give credit a performer of songs and not the author (and, in this case, the original performer). Ford's version was a huge hit and the first song I learned the sing, or so my parents and sister tell me as I was only three at the time.
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Because the Internet is full of lyrics websites which attribute songs to a performer and don't give any information about the lyricist and composer, or even tell you that it was a cover.
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Sixteen tons isn't about "debt" as in purely financial debt.
This is about companies paying employees in non-legal tender (vouchers - gift cards anyone?) which is only accepted at stores owned by the same company. Hence forcing workers to spend back into the company at prices the company sets, keeping employees in perpetual debt. This is about slavery with extra steps.
You could argue our current system is beginning to resemble that... But that song is not purely about debt per se.
And my favourite version of
Article mentions no useful details (Score:5, Informative)
The article (as far as I can tell) provides no breakdown on who is using BNPL. Nothing about age, gender, level of education, region, etc.
The quote about "using this for groceries" seems to come from self-reported surveys. (Whereas these companies should have exact insight into what the loans are actually financing, so there should be no reason for surveys). People might be self-reporting groceries because they don't want to admit using it to pay for inessential items.
I wonder if this is being driven by YOLO youthful idiocy, not realizing that these loans will have to be paid back OR they will suffer credit issues down the line when financing a house or car. But this article is extremely light on any type of useful details beyond that headline number of 91.5 million in the USA. That seems pretty insane as that is 1 in 4 people in the USA.
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at the grocery store i see a LOT of under-35s using all kinds of weird cards to pay.
i've used only my bank debit card in the past 20 years for groceries
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The people using this service already have credit issues. Hence the massive interest rates.
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Stores are will to pay that extra amount because people who use these will purchase more items, and these monthly payment programs don't have the legal protections that credit card provide so as an example there is no charge back capability.
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I think it's a good key indicator to include in evaluating the health of the lived economy (not the stock market). Here's what I watch:
1. Credit card delinquency (https://fred.stlouisfed.org/series/DRCCLACBS_
2. Sub-prime car loan delinquency (https://www.marketplace.org/story/2025/11/12/a-record-number-of-americans-are-behind-on-their-auto-loans)
2. BNPL companies like Klarna not meeting earnings expectations from their PRIMARY business (as opposed to propping up the business with speculative investment). In
Re: Article mentions no useful details (Score:1)
Remember when commercial real estate was going to crash the economy? What happened to that imminent threat?
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It DID crash the economy, but then the federal government stepped in, implemented the "too big to fail" doctrine, and blunted the damage into a recession instead of a depression. In that process, though, they exposed their weakness: the government will step in to rescue companies on which the US economy most relies.
This is particularly relevant when, amidst a widely acknowledged AI investment bubble, Google CEO Sundar Pichai says in the same breath that AI investment is at least partially irrational and reg
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Agreed. Here's are some more questions to add some nuance:
Should these organizations be stopped from getting "too big" so that they can fail without taking down the entire economy/internet/industry? If so, that would mean reigning in "boom" economies and industries, thereby risking the accusation of "stifling innovation" (the most common retort of large-scale financial scammers).
Should their failure be managed to ensure a soft landing? This was the practice for Lehman Brothers, Bear Stearns, Washington Mutu
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I wonder if this is being driven by YOLO youthful idiocy, not realizing that these loans will have to be paid back OR they will suffer credit issues down the line when financing a house or car.
Instead of complaining that youth are idiots because they don't understand finances, let's recognize it for what it is. They are financially ignorant. Ignorant because finance is not a part of education any more (if it ever was). The generation now entering adulthood comes from financially illiterate parents, so they're even more screwed. Not because they're stupid, just ignorant. And make no mistake that's exactly how our corporate overlords want it to be.
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By 2028 many of the people here reading this will be homeless.
I think this would hit a lot harder on Reddit. Slashdot is full of us olds who have lived through the Great Recession and look at Trump's economic fuckery like Florida Man would an approaching hurricane. "Bring it bitch, we've seen worse."
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I don't think anyone here believes that they are going to ever suffer any serious hardship. And that's why we have so many Trump supporters here. They keep quiet because this isn't a safe space and Trump supporters won't talk about it if they're not in a safe space. But I know th
Re: Ordinarily we get 8 years of democrat rule (Score:2)
"Most of us are well over 50..."
I think your perception of the demographic is skewed.
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Re:Ordinarily we get 8 years of democrat rule (Score:4, Funny)
1. You'd need supermajorities in the House and the Senate to impeach and convict the POTUS. Even with that, as soon as the President caught wind of what's going on, it's a distinct possibility that all of Congress could get detained by the national guard.
2. Those with no debts will weather this better than those with debts provided the US dollar is still worth something.
3. There was 12 years of Republican presidents from 1981 to 1993. (Reagan/Bush), so 8 years of Democratic rule doesn't always hold.
4.The current budget reconciliation system sloshes things around a lot as one party falls out of power and another comes into power. There can be no long term planning with this mechanism in place. Speaking of long term plans, there are none.
We still had massive infrastructure spending (Score:2, Interesting)
We were in a much better position to weather 12 years of Republican rule back then. The Republicans have been building up to t
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Power corrupts. Supermajorities corrupt any party in power, Democrat or Republican. It is the need to negotiate with the other party that makes our government special. Whenever they don't have to negotiate, you get what we have seen since January.
I strongly agree with the premise, however (Score:2)
I wouldn't think a late payment should count as a default. That last part sounds like trying to shove the data into your pre-assumed narrative.
Tell us how many people ended up not paying the money back, one way or the other.
Credit Cards (Score:2)
How is this any different from paying with a credit card? Americans have been carrying significant credit card debt for decades.
Not new. (Score:3)
There was a payday loan company commercial I heard on the radio in the early 2000s where some hillbilly type goes "Maw, I'm hooongry... but I don't wanna eats no more roadkill. Let's borrow some money and go to a real diner."
My gf and I look at each other like "What the fuck?"
Well... here we are.
So what (Score:2)
My credit card is essentially a BNPL device and yes, I also use it for buying groceries.
Not all people have access to credit cards due to bad credit, banks' obstinacy and other factors, but everyone wants the convenience associated with them. So, we have an unoccupied marked niche, and such niches usually don't stay unoccupied for long. And voila, we have BNPL, and it's on the rise, and nobody is surprised.
Feelgood (Score:2)