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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesBuy now, pay later (BNPL) in the United States is no longer a single pay-in-four checkout feature chasing explosive growth. It is a concentrated, multi-product lending business. The Federal Reserve estimates that six major providers issued $156.7 billion of U.S. BNPL credit in 2025, split evenly between pay-in-four plans and other short- or longer-term installment loans. That figure is an estimate built from company disclosures and scaling assumptions, not a government census of every provider. The category has matured through scale, product expansion and concentration, but its consumer economics still depend on late-payment rules, bank fees and whether a loan carries interest.
What changed in the U.S. BNPL business
The original BNPL proposition was simple: a shopper paid one installment at checkout, the provider paid the merchant (minus a fee), and the shopper paid the remaining installments, often every two weeks and often at 0% APR. That product remains important, but it no longer describes the whole category.
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The Federal Reserve’s June 2026 analysis covers six large providers from 2019 through 2025 and estimates $156.7 billion in U.S. BNPL issuance during 2025. Pay-in-four represented $78.3 billion, exactly half of the estimate. Other short-term products represented $31.2 billion and longer-term loans $47.1 billion. In the note’s detailed estimate, 63% of issuance carried 0% APR and 37% was APR-bearing. The introductory summary rounds the total to nearly $160 billion and says more than 60% carried 0% APR.
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One free scan finds every outdated or missing driver and matches the right update for your exact hardware.Free scan · exact hardware matchThis is best understood as a category estimate, not an audited market-share report. The authors combine public disclosures, use U.S.-specific figures where available and scale global company metrics when U.S. figures are unavailable. The scope therefore differs from a direct count of every BNPL transaction in the country. The Federal Reserve’s methodology and product definitions should accompany any use of the $156.7 billion figure.
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How big is BNPL, and what is being counted?
Two frequently quoted growth series measure different things. The CFPB’s historical series covers pay-in-four loans only. As summarized by the Federal Reserve, it rose from 19.8 million loans and $2.7 billion in volume in 2019 to 335.8 million loans and $45.2 billion in 2023. The Federal Reserve’s 2025 estimate is broader: it includes pay-in-four, other short-term products and longer-term installment lending. The figures should not be placed in one uninterrupted growth chart as though they were the same metric.
| Measure | Scope | Earlier figure | Later figure | Source and qualification |
|---|---|---|---|---|
| Loan count | Pay-in-four only | 19.8 million in 2019 | 335.8 million in 2023 | CFPB series summarized by the Federal Reserve; historical period ends in 2023 |
| Dollar volume | Pay-in-four only | $2.7 billion in 2019 | $45.2 billion in 2023 | CFPB series summarized by the Federal Reserve |
| U.S. issuance | Pay-in-four plus other short- and longer-term loans | Not comparable to the pay-in-four series | $156.7 billion estimated for 2025 | Federal Reserve estimate based on six providers’ disclosures and scaling methods |
The category therefore did grow rapidly in its original form, while the newer estimate shows why counting only pay-in-four understates the business that providers now operate. The available evidence does not establish a final full-year 2026 issuance total, so the 2025 estimate should not be presented as a 2026 outcome.
The 2025 product mix
| Product type | Estimated U.S. issuance in 2025 | Share of estimated total | Typical repayment pattern |
|---|---|---|---|
| Pay-in-four | $78.3 billion | 50% | Four installments, commonly every two weeks; terms and approval vary by provider |
| Other short-term products | $31.2 billion | About 20% | Short schedules that may differ from four equal payments |
| Longer-term installment loans | $47.1 billion | About 30% | Often monthly payments; may be 0% APR or APR-bearing |
Percentages are calculated from the Federal Reserve’s rounded categories and should be read as estimates. A 0% APR label applies only to the financing charge under the stated terms; it does not eliminate every possible cost associated with missed payments or a bank account funding the installment.
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Which providers dominate?
The Federal Reserve analysis covers Affirm, Afterpay (owned by Block), Klarna, PayPal, Sezzle and Zip. Concentration looks different depending on whether the comparison is pay-in-four alone or all BNPL credit.
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| Provider | Estimated 2025 U.S. issuance | Estimated pay-in-four issuance | What the mix indicates |
|---|---|---|---|
| Affirm | $41.3 billion | $6.3 billion | A large share of the estimate comes from longer-term lending |
| Afterpay / Block | $53.7 billion | $30.0 billion | Largest estimated total issuance and largest pay-in-four estimate |
| Klarna | $23.9 billion | $7.0 billion | Estimate includes pay-in-four, short-term and longer-term products |
| PayPal | $26.5 billion | $25.2 billion | Most of the estimated issuance is pay-in-four |
| Sezzle | $3.9 billion | $3.9 billion | Estimate consists of pay-in-four |
| Zip | $7.3 billion | $5.9 billion | Pay-in-four is the majority of the estimate |
These are the Federal Reserve authors’ estimates for U.S. activity in 2025, derived from disclosures or the note’s scaling methodology. They are not audited market shares, and company reporting periods and product definitions differ. On the pay-in-four measure, Afterpay/Block and PayPal together represented an estimated 70% of issuance. Across all products, Block and Affirm together represented about 60%; PayPal and Klarna represented 32%; and Zip and Sezzle together accounted for less than 10%.
How does BNPL make money?
Merchant fees remain the foundation of the checkout model. As the Federal Reserve Bank of St. Louis explains, providers’ revenue comes primarily from fees charged to retailers that offer BNPL. A merchant may accept a fee higher than the cost of a conventional card transaction in exchange for offering a payment option it believes can help conversion or average order value. A sales lift is a merchant expectation, not a universal result established for every retailer.
One separate 2022 study cited by the 2026 Federal Reserve note put BNPL merchant fees at roughly 5% to 8%, compared with 2% to 3% for credit cards. That is an older cited estimate, not a current market-wide price. Actual contracts vary by provider, merchant, risk, volume and product.
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- Selection and approval: At checkout, the shopper chooses a BNPL plan and receives an approval decision under the provider’s underwriting rules.
- Merchant settlement: The provider pays the retailer the purchase amount net of the agreed merchant fee.
- Scheduled collection: The provider collects the shopper’s initial and later installments. Pay-in-four commonly uses biweekly dates; other products may use monthly schedules.
- Additional revenue: Depending on the product and contract, revenue can include interest on APR-bearing loans and permitted late charges. The provider’s terms determine which charges apply.
This structure explains why the phrase “interest-free” is incomplete. A provider can earn a merchant fee on a 0% plan, while the shopper can still incur a late charge or a bank overdraft/NSF fee if an automatic installment fails. Longer-term products may add an APR directly.
What people buy and why they use BNPL
The Federal Reserve’s 2025 Survey of Household Economics and Decisionmaking asked BNPL users which purchases they had made in the prior year. Respondents could report more than one category:
- Clothing or accessories: 49%.
- Electronics: 32%.
- Furniture or appliances: 26%.
- Groceries or food delivery: 20%.
These percentages describe surveyed BNPL users who reported each category, not the share of all transactions or the share of all households. The two leading reasons were spreading out payments, cited by 87%, and convenience, cited by 82%. The Federal Reserve quotes those results in its August 2026 Consumer & Community Context.
What BNPL really costs when payments go wrong
Survey outcomes show why a 0% APR headline does not equal a zero-cost experience for every user. In the same 2025 household survey:
| Reported outcome | Share of surveyed BNPL users | How to interpret it |
|---|---|---|
| Paid late at least once in the prior year | 26% | Self-reported behavior, not a provider default rate |
| Charged extra for paying late | 17% | Self-reported late-payment charge |
| An installment triggered an overdraft or NSF fee | 11% | Fee charged by the user’s bank, not necessarily by the BNPL provider |
Users who used BNPL for groceries or food delivery were more prone to late-payment charges or overdraft/NSF outcomes in the survey. The result does not prove that a particular purchase causes delinquency, but it highlights the risk of using scheduled credit for recurring necessities when the funding account may be short.
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How to compare BNPL products or providers
A meaningful comparison starts with the contract, not the promotional label. Use the following axes and verify the current terms for the individual provider and state:
| Comparison point | Questions to answer |
|---|---|
| Product structure | Is it pay-in-four, pay-in-30 or a longer-term installment loan? Are payments equal or does the first payment differ? |
| Total borrowing cost | What APR applies, if any? Are late charges allowed? Could a failed debit create a separate bank overdraft or NSF fee? |
| Repayment mechanics | What are the exact dates, funding method and autopay rules? What happens after a declined payment? |
| Returns and disputes | Who handles a defective or missing purchase, and do installments continue while a merchant dispute is reviewed? |
| Credit assessment and reporting | Is a soft or hard inquiry used? Does the provider currently report activity to one or more credit bureaus? Confirm rather than generalize from another provider. |
| Merchant economics | What fee does the retailer pay, and is any claimed sales lift supported for that merchant’s channel rather than assumed? |
Two plans both advertised as 0% can therefore have different practical costs if their payment dates, failed-payment handling or dispute procedures differ.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is known about credit reporting and loan stacking?
The CFPB’s January 2025 study identified a measurement limitation in its study period: lenders generally had not reported pay-in-four loans to nationwide consumer reporting companies in volumes sufficient for outside observers to measure persistence, stacking loans across firms and total unsecured debt reliably. That finding describes the data available for the period studied, not a permanent rule for every provider today. Reporting practices can change, so a borrower should check the current provider disclosure and credit-bureau policy.
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How regulation should be described in 2026
The CFPB says it withdrew several guidance documents on May 12, 2025, including its 2024 BNPL interpretive rule. It is therefore inaccurate to describe that rule as currently in effect. The withdrawal does not establish that BNPL has no rules, nor does it mean every BNPL product is regulated exactly like a credit card.
Applicable obligations can depend on the product’s legal structure, provider, disclosures, servicing practices and the jurisdiction involved. The CFPB’s BNPL compliance resource and current state and federal sources should be checked before making a legal or compliance conclusion. The available evidence here does not provide a complete state-by-state regime for October 2026.
Why the “gold rush to business” description fits
Three changes distinguish the mature category from its early phase. First, scale is now measured in tens of billions of dollars, even using an estimate rather than a census. Second, the business is concentrated: a handful of providers account for most estimated issuance, although the leaders differ between pay-in-four and total lending. Third, product breadth has widened. Longer-term APR-bearing loans supplied roughly 30% of estimated 2025 issuance, so the economics cannot be analyzed solely through the lens of four interest-free payments.
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BNPL is still a growing credit alternative in the sense that its measured use expanded dramatically through the CFPB’s 2023 pay-in-four series and the broader 2025 issuance estimate is large. But the evidence does not support claiming a final 2026 growth rate, universal retailer sales gains or a single standard BNPL cost. The most accurate description is a large, concentrated U.S. credit category whose headline 0% product now sits alongside substantial interest-bearing lending.
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