In just a few years, Buy Now, Pay Later (BNPL) has become one of America’s go-to payment methods. According to data from the Consumer Financial Protection Bureau, the number of loans surged by almost 1,100% between 2019 and 2021.

This isn’t surprising. Buy Now, Pay Later presents a great opportunity to spread out the financial impact of a big purchase. However, where there are loans, there is debt — and, as reports show, BNPL schemes have created a $700 billion black hole that remains unaccounted for.

What caused the downfall of BNPL? Why did this once-celebrated payment method turn into a financial crisis for so many? And most importantly — are there better alternatives? We’ll answer these questions and more below.

What is ‘Buy Now, Pay Later’?

Buy Now, Pay Later payment schemes do exactly what they say — you can purchase an item without paying for it in full until later. Unlike traditional financing options that require credit checks and long approval processes, BNPL allows almost anyone to split payments into installments with minimal upfront verification. This makes it an attractive option for consumers with lower credit scores.

While initially BNPL seemed to be a fantastic solution for both consumers and retailers, the growing BNPL risks — such as hidden fees, mounting debt cycles, and lack of regulation — have ultimately caused more harm than good.

The rise of BNPL

Although BNPL might seem like a relatively new phenomenon, it’s not much different from traditional installment payments for big-ticket items. The main difference lies in who can access it and how it is used.

To understand why BNPL gained such momentum so quickly, we have to go back to the pandemic. With lockdowns limiting in-person shopping, e-commerce accelerated to a new horizon. Thanks to low interest rates and merchants willing to do whatever was needed to keep sales going, BNPL had the perfect environment to grow. People were spending more, too — credit and debit card data revealed a nearly 20% increase in online spending since January 2020.

With more consumers embracing online shopping, it’s easy to see why BNPL became a go-to payment method. The idea of deferring payment without dealing with immediate interest is tempting — especially for budget-conscious millennials and Gen Z. Major players like Klarna, Affirm, and Afterpay capitalized on this demand, reaching multi-billion-dollar valuations.

In fact, a study by NerdWallet shows nearly one in five shoppers (22% of Gen Z) chose BNPL as their preferred payment method. The appeal lay in its promise of customization, flexibility, and transparency — or at least, that’s how it was marketed. What many consumers didn’t anticipate was how easily these payments could spiral into unmanageable debt cycles.

The downfall of BNPL: the problems consumers face

Although BNPL promised to make checkout seamless, it introduced more problems than solutions. In fact, 56% of BNPL users admit they have experienced at least one issue, like missing payments or overspending while using the service.

Interestingly, among all consumers who have faced BNPL-related issues, Gen Z has encountered the most problems. As easy as it is for shoppers to use BNPL, many now find it challenging to make the payments. Here are the main risks you should be aware of:

Hidden fees and lack of transparency

When BNPL gained popularity, it was marketed as a hassle-free, no-cost way to finance purchases. In reality, many users have been surprised by hidden fees and complicated terms that go against what the service initially promised. In some cases, BNPL providers may charge higher interest rates than those on traditional credit cards.

Overspending

At first blush, BNPL might seem like a good solution for both retailer and consumer. However, research shows customers using these services usually end up spending more than those who don’t. More than half of BNPL users (57%) reported regretting purchases they couldn’t afford. With Americans already carrying over a trillion dollars in credit card debt, this is a significant issue.

Ruined credit score

Whether you hope to improve bad credit or establish a credit history, a BNPL plan won’t be of much help. If you miss one of your payments, it could harm your credit score and make it much more difficult to get credit down the road — for a property, a car, or anything else that requires financing.

No consumer protection

While there may be cons to credit cards, one good thing is that you can easily return a purchase and get a refund. That may not be the case with BNPL. Consumers who wish to return items usually have to contact both the lender and seller — and even then, there is no guarantee of getting your money back.

Checkout fraud

Companies using third-party BNPL platforms must trust that their provider’s fraud prevention measures are up to par. A glaring loophole is BNPL’s ability to let users purchase products without immediate payment — an aspect that has been highly exploited, leading to an increase in fake accounts and stolen identities.

How Krepling Pay took the good & removed the bad

On paper, BNPL was a brilliant idea — empowering consumers with instant access to goods and services without the heavy upfront financial burden. The problem was its execution. At Krepling Pay, we’ve learned from those mistakes and built a better checkout system that keeps friction low without harming customers or merchants.

Seamless checkouts

Traditional payment systems often require customers to navigate multiple steps, leading to cart abandonment. What BNPL promised, we delivered. Krepling Pay enables frictionless payments through one-click checkout and wallet integration — instant purchases without risky debt afterward, plus a save-payment feature for easy repeat purchases.

Transparent pricing and no hidden fees

There’s nothing worse than hidden fees. That’s why we prioritize transparent pricing: a clear breakdown of what and how much you’re paying. No monthly fees, no setup fees, no PCI fees, and no late fees. Our pricing is as simple as it gets.

You’ll be protected. Always

A 2023 report by the Federal Trade Commission showed consumers losing more than $10 billion to fraud. We use advanced fraud detection and tokenized payments to prevent fake purchases and data breaches — ensuring only high-intent buyers complete transactions.

Built to last

We don’t believe in short flings. We’ve taken lessons from common BNPL problems and designed our service to build long-term customer trust — not just drive instant conversions. But don’t just take our word for it. Our merchants report:

Why choose Krepling Pay over traditional methods

Global accessibility and flexibility

With traditional payment methods, you sometimes have to deal with geographical limitations — and in today’s competitive market, that can be the difference between success and failure. In fact, studies indicate 92% of shoppers prefer to buy on sites that price in their local currency, and 33% are likely to abandon a purchase if pricing is only in U.S. dollars. Krepling Pay supports multi-currency transactions and is compatible across all devices and browsers, so your business can reach a wider audience without technical barriers.

Quick and reliable payouts

According to a study by PYMNTS, 53% of companies reported improved cash flow management after implementing real-time payment systems. Managing cash flow is one of the most important parts of running any business — that’s why, with Krepling Pay, you get automatic daily payouts, with funds typically available within one to three business days.

Better customer retention

The overall checkout experience can be a dealbreaker for retention. If your clients need to go through six different pages before completing a purchase, there’s a big chance they’re not coming back. In fact, 91% of e-commerce shoppers admit a satisfying checkout experience significantly influences their decision to shop with a merchant again. Krepling Pay offers a digital wallet that remembers and encrypts customer details for quick, secure repeat purchases.

Final thoughts

BNPL started as a promising solution, giving consumers a way to break up payments without the burden of traditional credit. But as we’ve seen, hidden fees, the risk of overspending, and a lack of consumer protection turned it into a financial trap for many. Major providers skyrocketed in value, only to face stock crashes as merchants and consumers began to see the cracks in the system.

That doesn’t mean seamless, flexible payments have to come with risk. At Krepling Pay, we’ve taken the best aspects of BNPL — frictionless payments, quick checkouts, and convenience — while removing the financial pitfalls that put consumers and businesses at risk.