You might see it on sites like Amazon and many shopify stores where you can buy a product now and pay for it later in what is called installments. Many of these stores allow you to take a small $50 - $100 order and split it out over four months of payments.
Seems harmless enough right?
Until you realize just how many people are with money and how that debt quickly piles up when a single payment is missed. This turns into massive debt and debt that's increasingly harder to pay off. In fact it's now gotten to the point where you can legit finance your $9 lunch if you want. The buy now, pay later fad is putting people into massive debt.
Now I will admit I do run these things on my own business as well and they have driven a TON of new sales and business. I often find it wild how much and what a high percent of people actually opt for this method of payment. On the business side of it it comes with an agreement that you take on no risk and receive the full money and the company like shopify takes on the risk (but also gets the reward of late fees and interest charges)
But there's a deeper underground to all of this that most people are not talking about.
These company's are pushing the product as a buy now pay later in four easy payments with no interest and no fees. So how are they making billions in profits as their stocks soar?
Take a look at Affirm Holdings up over 86% in the last year and up over 180% since it's IPO release in early 2021.
Companies like this are blowing the S&P500 and other major index funds out of the water.
Over half of the people in the USA have or are currently using BNPL (Buy Now Pay Later) that's a massive market share and we already know that customer credit card debts have also skyrocketed over the last few years.
Let's also be clear that things are WILDLY over priced and personally I believe a good fraction of that is this idea that everything needs to be bought with debt. This causes more money and inflation then really exists. If you though the fiat system was bad in terms of how they can print money the credit system is a layer on top of this that's ever worse!
Now BNPL Could be a good thing but like everything you need to manage it and manage it well. You really only should be using it if you already have the money you know make those bucks for work you in interest for a few extra weeks.
But it's a risky game, one that if you're late just once on your payment like with credit cards comes with a hefty fee. Over 40% of people who have used BNPL in 2025 have reported to do at least one late payment.
These primary BNPL programs are Klarna, Affirm and Afterpay but I believe shopify's version is pretty up there as well.
How do BNPL Programs Make Their Money?
The answer might surprise you in that most of the money generation comes from the companies using them and not directly from you. However I'm sure like with everything the fees are priced into the products.
The company you are buying the product from that offers this option is paying a higher than credit card fee. For example when you use a credit card at the store there is normally a $0.30 transaction charge and then a roughly 1% - 3% charge on top of that which the company has to pay.
With BNPL that fee is almost double at around 5% - 7%.
Think of it as a micro loan that the BNPL program is giving customers which can be as small as $30. If you pay this off in time there is no fee to you normally 4-6 weeks. If you don't you start getting hit with massive interest and late payment fees.
So not only are these companies make 5% - 7% on the money they loan out they are also earning extremely high interest often times around 20% - 30% like credit cards have including late fees and you can start to see the massive amount of profits these companies are making but you can also see the real issue there.
Having any amount of debt even small with a 20% interest rate on it is devastating. This is because the most you could ever hope to make off your money in a rather safe manner would be roughly 4%.
This is how I constantly go into the system is rigged against you. If you're playing into any of these games you're trashing your freedom.
The Fiat system constantly prints money to fund whatever projects they want
The credit card system builds you into debt including home and car loans
The BNPL system is just another layer of fake money that people are using and turn into massive debts that they will never be able to get out of.
It is currently estimated that on top of the 1.2 trillion dollars in credit card debt (Of which remember most of that is collecting about 12% interest or higher) there is an emerging new debt class of BNPL 175 billions dollars and that number is rapidly growing as people look for seemingly better options to take on debt when in fact it's even worse!
It's estimated that by 2027 in just two more years of this consumer debts will hit 2 trillion dollars and at some point that bubble of debt is going to burts.
In fact we are starting to see this somewhat already as some of the smaller scale BNPL programs have had to close up shop because so many people have defaulted on their debts.