It seems like everywhere you can shop online, consumers are being encouraged to break up their cart total into smaller payments. A flight, fancy designer outfit, or new headphones certainly seem less intimidating and draining for the bank account at $33 per month. 

Every time I come across it, I resist the urge to “buy now and pay later.” Mostly because I can’t even predict what will happen three months from now. But 45 million shoppers in the US are clicking on these tempting online offers as a way to pay for clothes, electronics, home goods, and other items, especially Gen Z and Millennials. 

I was born after the initial rise of layaway, the retail practice of paying for store purchases with payments over time. The new kinds of installment loans are designed to be as easy to get as liking something on Instagram. Research shows these apps are also effective at encouraging consumers to order items they would otherwise hesitate to buy.

As a result, competition among these financial technology companies, often referred to as BNPL, continues to grow rapidly. Firms have been racing to gain clients, increase market share, and hire talent. But one major player is showing signs of slowing down.

Australian company Afterpay is among the largest and most well known firms offering point-of-sale installment loans to consumers. Last year, the app became an official sponsor of New York Fashion Week and was acquired by payments giant Square for $29 billion. However, data from our parent company, Thinknum Alternative Data, shows that hiring at Afterpay fell significantly in early February of this year and is nearly at year-to-date lows. 

Hiring growth at Afterpay’s competitor Klarna has also started falling since March 24 after steady going up since July 10, 2020.

Other big “buy now, pay later” companies include Affirm, Klarna, and Paypal, but there are also startups with millions of users such as Sezzle, SplitIt, Quadpay, and Perpay. 

The installment loans offered have simple repayment schedules, annual percentage rates (APR) of 10% to 30%, and often help increase sales. RBC Capital Markets estimated a BNPL option increases retail conversion rates of 20% to 30%, and boosts the average checkout total between 30% and 50%. One report estimated the worldwide transaction volume of BNPL loans will reach $680 billion by 2025.

As a result, Afterpay has spread to thousands of stores and brands like Petsmart, Ulta Beauty, Bed Bath and Beyond, as well as Target. However, Thinknum data shows locations that take Afterpay are concentrated in the US, UK, Australia, and New Zealand. 


A drop in hiring is often a signal of slower growth, but the BNPL industry is also experiencing more scrutiny and the possibility of increased regulation. Last December, the Consumer Financial Protection Bureau opened an inquiry. The agency asked Affirm, Afterpay, Klarna, PayPal, and Zip to submit information on the benefits and risks of their loans. The inquiry was prompted by significant use in the growth of BNPL during the Black Friday and Cyber Monday shopping weekend. 

The UK’s Financial Conduct Authority also expressed concern about the industry in its review about the large amounts of debt Gen Z and millennial shoppers were signing up for through BNPL loans, and the higher likelihood of missed payments. 

The knowledge of how much more I could be paying for purchases in late fees, and how easily I could accrue thousands of dollars in debt for things I don’t need, is enough of a deterrent for me from signing up for BNPL. But I can see the allure if you don’t already have a credit card, savings, a steady paycheck, or the willingness to pay for a big ticket item in full right away. 

The industry expects people like me to eventually give in and join the millions of existing users. All it takes is a few clicks. But I’m too worried about what happens afterward, and more government regulators are, too.