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For example, Affirm has issued 2 million debit cards as of June 2025鈥攗p 600,000 (43%) since January, per PaymentsDive. Now other FIs are starting to recognize how BNPL can bolster card growth, per The Financial Brand. Why this matters for FIs: The BNPL explosion is over, as user growth decelerates and the industry reaches maturation. But FIs can still find value in BNPL.

The news: Middle-income credit cardholders who are satisfied with their card are more likely to use buy now, pay later (BNPL) products than all other BNPL users, per a YouGov survey. 48% of satisfied US credit cardholders who used BNPL in the last month reported being middle-income, versus 39% of all BNPL users. BNPL users who were satisfied with their credit card were also more likely to be higher income than all BNPL users, at 10% to 8%. Our take: Issuers of credit cards should note that even their happiest customers desire the flexibility of interest-free installment plans. Credit card companies can get ahead by marketing their card-linked installment plans to their cardholder bases and capture the BNPL spend that could have been lost to a fintech.

The news: Michigan State University Federal Credit Union (MSUFCU) launched an in-house buy now, pay later (BNPL) feature to serve its members鈥� financial needs, per a press release. Our take: Credit unions can compete with big banks and fintechs alike by leaning into what younger consumers want. Catering to these student members helps credit unions stave off their age dilemma: In 2023, 69% of credit union customers were Gen X or older, per a McKinsey & Company study. Conversely, banks are performing better with younger consumers: 41% of their banking population is millennial and Gen Z and 58% are Gen X or older. As graying members spend down savings and shrink credit unions鈥� deposits and interest income, players like MSUFCU can strengthen their banking relationships with young members through aligned alternative finance methods like BNPL.

The news: Marqeta鈥檚 total processing volume (TPV) hit $91 billion in Q2, a 29% YoY increase. Our take: Marqeta鈥檚 success with buy now, pay later could help it finally wean off its dependence on Block, which still accounts for 46% of its business. With planned expansions into Europe, Marqeta has the opportunity to put more distance between it and its competitors by leaning into solutions for alternate financing and currencies, like BNPL and crypto.

The news: FundCanna launched B2B buy now, pay later (BNPL) platform ReadyPaid to address the cannabis industry鈥檚 endemic cash-flow problem. Our take: Alternative financing pairing well with an alternative industry comes as no shock. If cannabis is finally descheduled by the federal government鈥攐r at least reclassified, as President Donald Trump has considered鈥擱eadyPaid will have a harder time competing against traditional banks that likely will openly service weed-related business without regulatory threats.

The news: More than one-third (38%) of parents are stressed about affording back-to-school items, per Zip鈥檚 back-to-school survey. Our take: Given the level of strain for parents, BNPL providers have an opportunity to pitch their alternative credit models to overstretched families. Targeted marketing campaigns around back-to-school season and easy opportunities to use installments in store and online through BNPL-enabled cards and partnerships can strengthen spend.

41% of US buy now, pay later (BNPL) users have bought clothing, shoes, and outfit accessories with the services, according to April data from LendingTree and QuestionPro.

Participating BNPL providers: Affirm is the only major BNPL company reporting to the credit bureaus. Previous tie-ins with FICO, Experian, and TransUnion have demonstrated Affirm鈥檚 commitment to cementing BNPL鈥檚 standing as a mainstream payment method. We forecast that Affirm commands 30.6% of total US payment value penetration for BNPL, making it the running leader of the BNPL field in the US.

However, FICO and Affirm found in a study that scores for consumers who responsibly paid on time for their installment plans either rose or stabilized鈥攑roving BNPL use can be compatible with improving consumer personal financial health metrics.

Affirm and Afterpay cut their rewards program last year after struggling to harness the revenue streams to finance these costly programs. Other BNPL firms pivoted to subscription models to boost profitability and finance their rewards programs or simulate a credit card experience for consumers鈥攁nd user adoption was tepid at best. The crux of the issue: BNPL is a low margin business.

Competitors like Affirm power financing for Visible by Verizon and Metro by T-Mobile, but no other BNPL firm has stepped into a role as mobile virtual network operator (MVNO). Klarna鈥檚 bottom (phone) line: Klarna wants regular users and reliable, predictable payment volume.

The news: Klarna is pivoting toward digital banking in the US, preparing for its IPO amid growing scrutiny of the buy now, pay later (BNPL) market. This includes launching US debit cards and expanded savings offerings, with Klarna rebranding itself as a neobank aiming for a "super app" experience. Our take: This signals a broader trend of fintechs evolving into banks, intensifying pressure on traditional financial institutions (FIs) to differentiate. FIs must clarify their niche, pursue strategic scale, and accelerate digital transformation. Despite Klarna's expansion, FIs retain a key advantage: their card-based installment plans still outperform BNPL in customer satisfaction.

The news: Klarna will be the default payment option for Bolt鈥檚 CheckoutOS merchants, per a press release. Our take: Klarna faces multiple challenges. It has to increase its availability to US consumers while also rivaling credit cards that offer both installment plans and cash back or points that likely exceed the value of Klarna鈥檚 gift-based rewards system through Nift

The news: Fiserv will launch its own stablecoin, FIUSD, by end of year to complement its existing banking and payments infrastructure. Our take: Reporting BNPL data to the credit bureaus would be a solid step toward combatting BNPL鈥檚 鈥減hantom debt鈥� criticism.

Affirm is currently promoting 0% APR loans with select merchants to attract prime borrowers and cement consumer loyalty. Affirm stands to make significant returns with consumers drifting towards installment loans: barring its interest-free Pay in 4 program, Affirm鈥檚 longer-term installment plans may have up to 36% APR.

The ease and novelty of BNPL loans can rapidly snowball into a crisis for already financially fragile consumers.

Klarna鈥檚 gross merchandise volume (GMV) rose 10% YoY to a whopping $25.3 billion鈥攆our times that of its nearest competitor, Affirm. Klarna benefits from a much more established international presence than Affirm鈥檚 US-heavy base. Narrowing in on the US market, our forecast shows Affirm and Klarna are neck-in-neck in payment value.

With Affirm reporting loans to TransUnion, eagerness to mirror traditional credit providers may build from within the fintech space鈥攔ather than from outside pressures.

Gen Zers are most likely to experience a problem with the payment method. These concerns could weaken BNPL transaction growth

The Gen Z BNPL debt trap has yet to materialize: Credit card delinquency rates are higher than those at BNPL leader Affirm, for example. Payment providers have opportunities to spur Gen Z鈥檚 debit, credit, and BNPL usage. They can boost debit usage by adding more financial management features into payment and banking apps. Prioritizing rewards and payment flexibility could encourage credit card usage.