“Buy Now Pay Later ruined me”: How the latest digital payment products are driving Gen Z into debt

Jane Seymour-Smith (not her real name) had saved up $22,000 for her mortgage down-payment for a dream home in the suburbs by the time she was 22. Then the offers began flooding in — ‘Buy Now, Pay Later’. 20% discounts on Black Friday deals. The promise of 0% interest rates. Six months later, she shared, ‘Buy Now Pay Later’ had “ruined everything”. Seymour-Smith eventually wound up with $56,000 in high-interest debt from these services.

Buy Now, Pay Later (BNPL) services have been touted as the latest in financial and payment innovation, with services like Klarna and Afterpay dominating the payments landscape with flashy ads, attractive promotions and promises of low-interest repayments. For many Gen Z consumers, these services provide an accessible way to buy their latest iPhones and Keurigs without the need for a large upfront payment. However, the BNPL sector is increasingly being exposed as a predatory lending scheme, with slick marketing that exploits the ignorance of younger, lower-income consumers.

How does BNPL work?

BNPL provides consumers with the option of procuring their products or services without full upfront payment. The total purchase cost is typically split into equal tranches billed to the customer’s credit…