top of page
Writer's pictureMikahila Bloomfield

Buy-now, Pay-later Sees Billions Disappear Behind Regulation Rumors & Missed Payments

Was it always too good to be true?

Klarna buy now pay later service in store brick and mortar

For a time, Buy-now, Pay-later seemed like a God-send to retailers. This revamped layaway payment scheme costs retailers 1.5 percent to 7 percent of the purchase price — higher than the rates many credit card companies charge retailers. However, retailers gladly pay up because offering customers BNPL services can boost conversion rates as much as 20 percent to 30 percent and result in greater cart values of 30 percent to 50 percent more for retailers. Another big plus is that BNPL is a great strategy for attracting new customers, especially young customers.


But the well may be running dry. While Swedish BNPL giant Klarna was making headlines in May for laying off ten percent of its staffers, Australian BNPL firm Latitude rescinded its offer to acquire Humm’s BNPL business with the reason cited being market conditions. Just this week, Klarna closed its recent financing round with a valuation of $6.7 billion, plummeting from its $45.6 billion last year. In a similar fashion, US-based Affirm has seen its value sink to $6.1 billion, a far cry from its $47 billion peak last November.


During the pandemic, BNPL companies benefited from a spike in consumer spending, but that increased spending is a part of the recipe that has led the global economy to higher interest rates and borrowers missing payments. To top it off, greater market saturation as new players enter the space and growing calls for regulation do not bode well for the BNPL business.


Going forward, we can expect to see minimum purchase requirements in place — Buy Now, Pay Later for a $10 crop top may be a thing of the past. Maybe it's for the best since fashion still needs to curb its overconsumption problem and solve the returns issue.


Do you find Buy-now, Pay-later services useful? Leave a comment below. Follow Fashion League on Instagram, and subscribe to our newsletter for Faux or Fashion™ trivia, and the latest job postings from some of your favorite companies.


  • Pinterest - Black Circle
  • Facebook - Black Circle
  • Twitter - Black Circle
  • Instagram - Black Circle
Recent Posts
bottom of page