NEW YORK, February 1, 2023 (Newswire.com) - iQuanti: Buy Now Pay Later (BNPL) saw a surge of use in 2022 by offering the chance to pay for the things we need (or want) in small, monthly payments. But now that people are beginning to feel the crunch of inflation pricing and stagnant incomes, BNPL is getting scary to use. So is this the end of BNPL as a payment method? If so, what will replace it?

How BNPL works

When you make a purchase with BNPL, you're actually buying the right to pay for the item over time. You don't have to worry about late fees or interest rates because all payments are handled by the service (like Affirm or Klarna). 

BNPL became increasingly popular with Millennial and Gen Z shoppers due to their struggles in the workforce finding steady, good-paying employment and increased aversion to taking in debt (as compared to older generations). In other words, they're more likely to want to buy something and then pay for it over time rather than take on a large debt.

Why the BNPL trend may be coming to an end

BNPL has been incredibly popular due to its convenience and low-cost payments. But there are a few things that could put an end to its reign as king of payment methods. 

Inflation pricing

The main problem with BNPL is inflation - prices keep going up, and people aren't making enough money to cover the increase in costs. This means that even if you're making small monthly payments, your purchases still cost you more in the long run.

Increased aversion to debt

Another problem with BNPL is that people are increasingly avoiding taking on debt. This is due to the high-interest rates and other fees associated with traditional loans, as well as the fear that debt will prohibit them from doing things they want or need in life. If this trend continues, BNPL could eventually become a thing of the past.

Alternatives to BNPL

There are a few alternatives to BNPL that could take its place as the go-to payment method for those who aren't willing or able to pay in full.

One option is prepaid cards. These cards allow you to spend your money in advance, which can be helpful if you're trying to save money on your groceries or buying something big.

Another option is Venmo. This app allows you to easily send and receive money with friends and family, which can be helpful if you need to pay for something quickly but don't want to deal with the hassle of carrying cash around.

Finally, there's the option of using 0% interest promotional APRs. During the height of the pandemic, many credit card companies got rid of this option due to the increased risk of their customers defaulting. However, now that the economy has stabilized somewhat, more cards are offering this as an option for new purchases or balance transfers again, removing the need for BNPL.

The bottom line

Could the era of BNPL dominance be over? Only time will tell, but many financial experts aren't sure it'll keep its market share permanently. Whatever replaces BNPL will likely require a combination of convenience, low-cost payments, and debt avoidance.