Buy Now, Pay Later market grows as pricing models shift

The Buy Now, Pay Later (BNPL) market in the United States is experiencing significant growth, with transaction volumes in e-commerce reaching $38 billion in the first quarter of 2026. According to a J.D. Power study, 37% of U.S. consumers used BNPL in the past 90 days, a figure that rises to 50% among those under age 40. While the sector is projected to reach $258.40 billion by 2031, traditional credit cards are mounting a competitive response through growing installment plan usage.

Economic modeling from researchers at Washington University in St Louis and Shanghai Jiao Tong University suggests that BNPL services may have indirect effects on retail pricing. The study, forthcoming in Management Science, indicates that because retailers receive less from financed sales due to provider fees, they may raise the common sticker price to compensate. This could result in consumers who pay upfront facing higher costs than they would in a market without BNPL options.