“Buy Now, Pay Later” (BNPL) services, such as Affirm, Afterpay, Clearpay and Klarna, saw explosive adoption as e-commerce upshifted into a higher gear during the pandemic, but are now facing questions over their sustainability against a tide of rising interest rates, inflation and regulatory threats.
The services let shoppers defer payments to a later date or break up purchases into interest-free installments.
Rising interest rates narrow already-thin margins for BNPL providers. Their profitability is dependent on their own borrowing rates being much lower than the fees charged to merchants for their service.
