“Buy Now, Pay Later” Beyond “Pay in 4”, A Comprehensive Product Overview

June 05, 2026

"Buy Now, Pay Later" Beyond "Pay in 4", A Comprehensive Product Overview

Nina R. Acree, Kayleigh Barnes, Alexander Bruce, Simona M. Hannon^*

1. Summary

The emergence and rapid growth of "Buy Now, Pay Later" (BNPL) services represent a novel financial development in the consumer credit landscape, reflecting evolving payment preferences and changes in point-of-sale financing arrangements. While BNPL providers offer a menu of credit products typically at the point of sale (such as a range of short- and longer-term installment loans in addition to the signature "pay in 4" plans), the nascent literature on BNPL has centered on "pay in 4" products, focusing on user characteristics and usage consequences.¹ Similarly, existing market size estimates-such as those from the Consumer Financial Protection Bureau (CFPB 2025) for 2019 through 2023-examine exclusively the "pay in 4" plans.² However, comprehensive and current measures of the broader U.S. BNPL credit market-including "pay in 4" and other short- and longer-term installment loans sometimes also called BNPL-remain scarce.

In this note, we address this gap by leveraging publicly disclosed information from the six major market participants spanning 2019 through 2025. We present three principal findings. First, we estimate that BNPL providers originated close to $160 billion in consumer credit products in 2025, with "pay in 4" plans representing about half of the issuance and other short- and longer-term installment loans accounting for the remainder. Over 60 percent of the total issuance carried 0 percent APR. Second, we document substantial growth in BNPL issuance since 2019, with "pay in 4" volume increasing nearly 80 percent since the CFPB's most recent 2023 measurement, while other short- and longer-term installment products expanded at comparable rates over the same period. Third, we provide detailed 2025 metrics on annual issuance and market shares for each of the six major BNPL providers.

2. BNPL Company Products

BNPL financing enables consumers to divide purchases into installments repaid over time. BNPL companies offer two principal credit product categories that are typically offered at the point of sale: (1) the short-term, interest-free signature BNPL product that allows the purchase to be split into 1 to 4 payments-most commonly referred to as "pay in 4", and (2) other short- and longer-term installment loans that can be 0 percent APR or APR bearing. In this note, we classify the other BNPL installment loans to be short term if they have maturities of up to 4 weeks or up to 30 days, while longer-term loans are those with maturities longer than 30 days.

The BNPL point-of-sale credit products are offered in partnership between a loan provider and a retailer and are typically tied to a specific purchase.³ The repayment plan is usually selected by the borrower at the in-store or online checkout from a menu of BNPL plans and is subject to an approval by the offering BNPL lender. The majority of plans provided by BNPL companies require credit assessment, commonly via soft credit inquiry.⁴

Under a "pay in 4" plan, upon approval, the provider charges the initial payment and remits to the retailer an amount equal to the purchase price net of applicable merchant fees.⁵ The consumer receives the merchandise and remits subsequent payments to the provider at two-week intervals. Under other short- or longer-term installment plans, consumers receive merchandise and make payments at regular intervals-typically monthly-with the initial payment generally due 30 days post-purchase.

3. Data and Estimation Methodology

To map the size of the BNPL credit market and its credit product landscape, we focus on the main market participants: Affirm Holdings, Inc. (Affirm), Afterpay (owned by Block, Inc.), Klarna Group (Klarna), PayPal Holdings, Inc. (PayPal), Sezzle, Inc. (Sezzle), and Zip Co Ltd (Zip).⁶

Our analysis synthesizes publicly disclosed documents and data from these firms, including regulatory filings (8-K, 10-K, 10-Q, 20-F), investor relations materials, earnings presentations, press releases, and financial information spreadsheets listed in Table 1. From these sources, we construct a comprehensive dataset spanning 2019 through 2025 containing firm-specific metrics on annual credit issuance disaggregated by product type ("pay in 4," other short-term installment loans, and longer-term installment loans) and cost structure (0 percent APR versus APR bearing).

Table 1: BNPL Estimation Data Sources

Where firms report U.S.-specific figures directly, we use these values. When U.S.-based metrics are unavailable, we estimate them by applying a scaling factor to global issuance. This scaling factor reflects the U.S. share of firm activity, derived from the ratio of U.S. to global gross merchandise volume (GMV) or equivalent metric, or from the ratio of U.S. to global income or revenue, depending on data availability for each provider.⁷

4. The BNPL Credit Market between 2019 and 2025

Table 2 presents estimates of the U.S. BNPL market size in 2025, encompassing "pay in 4" products alongside other short-term and longer-term installment loans. We estimate that there were $156.7 billion of BNPL products issued in 2025 (column 4). "Pay in 4" plans accounted for $78.3 billion (column 1) and represented 50 percent of total originations (column 5), while the remainder comprised of other short- and longer-term BNPL loans.

Table 2: BNPL Company Annual Credit Issuance by Loan Type

Our estimates also suggest that Afterpay/Block and PayPal dominated U.S. "pay in 4" issuance volume, collectively representing 70 percent of this segment (column 1 and Figure 1a).⁸ Meanwhile, we estimate that Block (Afterpay's parent) and Affirm were the largest BNPL market participants when considering total credit issuance (column 4 and Figure 1b).⁹ In 2025, these two providers originated $95 billion in BNPL credit products, accounting for 60 percent of total issuance. Finally, PayPal and Klarna jointly represented 32 percent of originations, while smaller providers-Zip and Sezzle-accounted for less than 10 percent (column 4 and Figure 1b).¹⁰

The proportion of 0 percent APR products within total BNPL issuance also merits examination. In Table 3, we estimate shares of APR-bearing versus 0 percent APR products across both short- and longer-term installment loans. Our estimates of 0 percent APR issuance comprise all "pay in 4" products plus 0 percent APR offerings within the short- and longer-term installment loan categories. As Table 3 indicates, approximately 63 percent of total BNPL issuance in 2025 carried 0 percent APR (column 3), while the remaining 37 percent bore APR charges (column 4). According to our estimates, Affirm and Block dominated APR-bearing product originations (column 2), collectively representing over 90 percent of this segment.¹¹

Table 3: BNPL Company Annual Credit Issuance by Loan Cost

To establish a longer-term perspective on BNPL product offerings in the U.S., we extended the CFPB 2025 published "pay in 4" estimates covering 2019 through 2023 by constructing our own estimates for 2024 and 2025 (reflected in Table 2). We further supplemented these data with estimates for short-term installment loans from Block and Klarna, and longer-term installment loans from Affirm, Klarna, PayPal, and Zip.¹²

Figure 2(a) reveals substantial expansion in "pay in 4" issuance (purple) since the product's U.S. market entry, with volume increasing nearly 80 percent beyond the CFPB's most recent measurement of $43.9 billion in 2023 (CFPB 2025). Notably, longer-term installment loans (green) constitute a substantial share of total BNPL credit issuance and expanded at approximately the same pace as "pay in 4" products. Short-term installment loan issuance (blue) accelerated substantially over this period.

Figure 2(b), demonstrates that the majority of BNPL credit products historically carry 0 percent APR (grey), with the share of 0 percent APR loans in total decreasing from a peak of 83 percent in 2020 and 2021 to 63 percent currently.

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