View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. News
December 17, 2021

US regulator orders BNPL firms to provide data on services

By Amala Johney

The US Consumer Financial Protection Bureau (CFPB) has initiated an inquiry into ‘buy now, pay later’ (BNPL) credit following concerns about consumer risk.

Free Report
img

What does the future hold for BNPL market?

The global Buy Now Pay Later (BNPL) market is estimated at a massive $120 million in 2021 – representing just less than 3% of the global ecommerce market. Yet the user-base is massive, with leading provider, Klarna, alone reportedly having 87 million users in 2021. This market is only expected to grow, with established companies like Apple and Goldman Sachs moving into the BNPL sector in bids to capitalize on this trend. To help you make the most of this growing market, GlobalData’s Buy Now Pay Later in 2022 and Beyond report provides detailed insight into the BNPL sector. This report:
  • Discusses the disruptive potential of the BNPL sector on the payments industry
  • Identifies the leading companies that are driving sector growth and the benefits this new payments solution provides to both merchants and consumers
  • Analyzes the consumer’s risk of using BNPL loans and government attempts at introducing regulations to the sector
  • Uncovers the main risks that consumers expose themselves to when borrowing with BNPL
Download this free report to get to know where this developing market is headed, and how you can reshape your strategies.
by GlobalData
Enter your details here to receive your free Report.

The agency has ordered BNPL firms Affirm, Afterpay, Klarna, PayPal, and Zip to submit data on the risks and benefits of their services that enable consumers to pay for their purchases in instalments often without any interest.

Usually, the application process for such services takes little time and involves relatively little information from the consumer.

The CFPB said that it is concerned about ‘accumulating debt, regulatory arbitrage, and data harvesting in the consumer credit market’ that is quickly evolving on the back of the technology.

CFPB director Rohit Chopra said: “BNPL 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.

“We have ordered Affirm, Afterpay, Klarna, PayPal, and Zip to submit information so that we can report to the public about industry practices and risks.”

Firms operating in the booming BNPL segment claim this option to be a ‘safer alternative to credit card debt’.

Further, merchants, who are turning to BNPL programmes, typically agree to pay 3% to 6% of the purchase price to the companies as consumers tend to buy more with the BNPL option.

CFPB expects to find the range of BNPL consumer credit products and their underlying business practices with its inquiry.

The agency is working with international partners in the UK, Sweden, Germany and Australia on the inquiry.

In October this year, CFPB ordered Amazon, Apple, Facebook, Google, PayPal and Square to provide information about their payment systems.

The BNPL segment has burgeoned during the pandemic as consumers turned to online shopping. The explosive growth and increasing investment in the sector have made companies, including Mastercard, and Visa, enter the arena.

Free Report
img

What does the future hold for BNPL market?

The global Buy Now Pay Later (BNPL) market is estimated at a massive $120 million in 2021 – representing just less than 3% of the global ecommerce market. Yet the user-base is massive, with leading provider, Klarna, alone reportedly having 87 million users in 2021. This market is only expected to grow, with established companies like Apple and Goldman Sachs moving into the BNPL sector in bids to capitalize on this trend. To help you make the most of this growing market, GlobalData’s Buy Now Pay Later in 2022 and Beyond report provides detailed insight into the BNPL sector. This report:
  • Discusses the disruptive potential of the BNPL sector on the payments industry
  • Identifies the leading companies that are driving sector growth and the benefits this new payments solution provides to both merchants and consumers
  • Analyzes the consumer’s risk of using BNPL loans and government attempts at introducing regulations to the sector
  • Uncovers the main risks that consumers expose themselves to when borrowing with BNPL
Download this free report to get to know where this developing market is headed, and how you can reshape your strategies.
by GlobalData
Enter your details here to receive your free Report.

NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. A weekly roundup of the latest news and analysis, sent every Wednesday.
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Electronic Payments International