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The Evolution of Consumer Credit: A Critical Analysis of the "Buy Now, Pay Later" (BNPL) Model 1. Introduction

The retail landscape has undergone a significant transformation with the rise of "Buy Now, Pay Later" (BNPL), a modern iteration of traditional installment plans. Facilitated by financial technology (FinTech) firms, BNPL allows consumers to receive goods immediately while deferring payment through interest-free installments. This payment method has moved from a niche e-commerce feature to a dominant global force, with market spending projected to reach $680 billion by 2025. 2. The BNPL Business Model buy now pay next year

BNPL leverages psychological triggers to increase retail spending. The Evolution of Consumer Credit: A Critical Analysis

: Approval is often near-instant, requiring only a "soft" credit check that does not impact the user’s credit score. 3. Impact on Consumer Behavior This payment method has moved from a niche

: The most common structure is "Pay in 4," where the total cost is divided into four equal payments due every two weeks.

Unlike traditional credit cards that rely heavily on interest from consumers, the BNPL model shifts the primary revenue burden to merchants.

: Retailers typically pay BNPL providers a commission ranging from 2% to 8% of the transaction value.