M-RCBG Associate Working Paper No. 182

Grow Now, Regulate Later? Regulation urgently needed to support transparency and sustainable growth for Buy-Now, Pay-Later

Marshall Lux
Bryan Epps



“Buy Now, Pay Later” (BNPL) companies have seen significant growth in the past few years in the U.S. market. BNPL products are expected to account for a considerable portion (12%) of ecommerce sales by 2025. Despite BNPL’s significance in the American economy, most BNPL products are far less regulated than their near substitutes. BNPL product design often places it in a legally confusing position (or solidly outside of regulatory oversight). Regulators have struggled to react at a pace consistent with the pace of BNPL growth. To support sustainable growth of BNPL in the US, greater transparency is needed for consumers, investors, lenders, and regulators. This working paper explores the implications of BNPL uncertainties with a focus on consumer risk, options for self-regulation, and recommendations for regulatory and policy intervention. It investigates the origins of the challenges and opportunities presented by BNPL and explains how interventions can help maximize the social and commercial value of BNPL.

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