Dive Brief:

• Of all Afterpay’s U.S. customers who used its buy now, pay later services to pay for 2025 Black Friday and Cyber Monday purchases in four installments, most (96%) have repaid that financing early or on time, the payment provider said in a Thursday release. 
• Separately, the company also said that through the third quarter of last year (excluding the year-end holiday purchases), most of the customers (98%) had not incurred late fees, per the press release.
• The Block subsidiary touted its guardrails designed to ensure customers spend responsibly, including automatic account pauses following missed payments, low initial spending limits, soft credit checks and its financial hardship policy for cash-strapped customers, the release noted.

Dive Insight:

As Afterpay applauded its customers’ repayment data, the San Francisco-based BNPL provider is positioned its services in the release as an alternative to credit cards.

To compare itself to card use, the company cited the Consumer Financial Protection Bureau’s recent report, which found that credit card balances surpassed $1.2 trillion in 2024. On average, credit cardholders carried a balance of $5,300 in 2024, per the report.  

Afterpay promoted its safeguards as a method to prevent customers from “the debt spiral that has become endemic to traditional credit card usage,” the release noted. 

“This data is a testament to the discipline and financial responsibility of our customers,” Marni Schapiro, global head of commerce sales at Block, said in a press release. “During the holidays — a time when spending pressures are at their highest — our customers demonstrated that they can shop confidently and pay responsibly.”

Though BNPL providers want to be viewed as an alternative to high-interest credit cards, more CFPB research suggests that the market comes with its own risks. 

Nearly two-thirds of U.S. consumers who use buy now, pay later transactions borrow from multiple BNPL providers simultaneously, according to a CFPB report released last year. Furthermore, 61% have subprime credit scores, meaning a FICO score between 580 and 619, or deep subprime credit scores, meaning below 580, the report found. 

Between 2022 and 2023, the average annual dollar value of a BNPL loan rose from $745 to $848, a CFPB report released last month found. 

Meanwhile, sales through BNPL platforms have risen overall during the holiday season. BNPL spending rose 9%, on a year-over-year basis, to $10.1 billion between Nov. 1 and Dec. 1, an Adobe analysis found. Klarna Group reported a 45% surge from a year earlier in spending across its lending services between Nov. 1 and Nov. 28. 

As demand for BNPL grows, so has the scrutiny from financial regulators.

In November, a group of Senate Democrats sent letters to Affirm Holdings, Afterpay, Klarna, PayPal Holdings, Zip, Sezzle and Splitit requesting information regarding their loan services, the volume of transactions made using the loans, their average loan sizes, and the number of consumers using them.

The following month, attorneys general in seven states sent letters to multiple BNPL companies seeking information about their loan services and payment dispute resolution processes.