WASHINGTON—Buy now, pay later lending continued to expand in 2023, but at a slower pace than in earlier years, as consumers used the products more frequently while delinquencies and charge-offs declined, according to a new CFPB data spotlight on the BNPL market.
The report, which analyzes data from six large BNPL providers including Affirm, Afterpay, Klarna and PayPal, found loan originations rose 23% from 2022 to 2023, while the inflation-adjusted dollar volume of loans increased 26%. In total, the surveyed firms originated about 336 million BNPL loans worth $45.2 billion in 2023, marking continued growth but at a noticeably slower rate than during the market’s rapid expansion earlier in the decade.
Consumer usage also increased. The CFPB said an estimated 53.6 million consumers took out at least one BNPL loan in 2023, up 12% from the prior year, though the Bureau cautioned the figure likely overstates the true number of users because borrowers may use multiple providers. On average, consumers took out more loans and borrowed larger total amounts per year, with average annual BNPL borrowing per user rising to $848, adjusted for inflation.
At the same time, indicators of stress improved. The share of BNPL loans assessed late fees fell to 4.1% in 2023, down from 5.2% a year earlier, and late fees collected accounted for a smaller share of total loan volume. Charge-off rates also declined, with 1.83% of loans written off as uncollectible in 2023, compared with 2.63% in 2022.
The CFPB said the data suggest BNPL has become a more established part of the consumer credit landscape, even as growth moderates and providers tighten underwriting and diversify into other products. The Bureau said it will continue monitoring the market as consumers rely more heavily on short-term installment credit for everyday retail purchases.