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The checkout button has quietly reshaped how a generation thinks about borrowing money online.
Services from Klarna, Afterpay and Affirm have turned splitting a purchase into four payments into a mainstream shopping habit, especially among people under 35. Marketed as a smoother, friendlier alternative to credit cards, buy now, pay later products rarely use the word that regulators and economists apply to them.
That gap between how the product is sold and what it actually is has now been measured. A peer-reviewed study of 705 young adults aged 18 to 34, published in September 2026 in the journal Financial Services Review, found that four in 10 did not recognize buy now, pay later as debt. Nearly half believed it carried fewer consequences than other forms of borrowing.
The researchers, based at Auckland University of Technology and Griffith University, surveyed young New Zealand adults and tracked how those perceptions shaped behavior. The pattern they found runs beyond mindset into money changing hands.
A loan to pay off a loan
Among users, 43% had turned to other forms of credit, including credit cards, to meet their buy now, pay later repayments. Just over half, 55%, had incurred late penalties, and nearly one in eight had been hit with those penalties three or more times.
The authors argue that the product’s branding does the heavy lifting. Writing in The Conversation, the research team described buy now, pay later as marketed as a convenient way to pay for purchases over time while remaining fundamentally a form of debt. Speedy approval and a one-click checkout, they noted, reinforce the sense that nothing is being borrowed at all.
One finding cut against intuition: respondents who said they had received financial education were less likely to identify the product as debt. The authors suggest the marketing language sits far enough outside traditional categories like loans or credit cards that standard money lessons do not catch it.
Regulators step in on different timelines
Oversight is tightening unevenly across major markets. In the United Kingdom, the Financial Conduct Authority brought buy now, pay later lenders under its full regulatory regime on 15 July 2026.
Firms now need authorization to offer the agreements, must carry out affordability checks, and are expected to support customers in financial difficulty. UK users of agreements signed after that date can take complaints to the Financial Ombudsman Service.
The picture in the United States has gone the other way. The Consumer Financial Protection Bureau withdrew its 2024 interpretive rule, which had applied credit-card-style protections to buy now, pay later, on May 12, 2025, leaving the bureau’s own guidance page pointing shoppers back to its general credit-card resources rather than a BNPL-specific rulebook.
