CFPB report highlights the competitive benefits of BNPL over legacy credit products, including lower fees and ease-of-use

WASHINGTON, D.C. – The Financial Technology Association (FTA) released a response to the Consumer Financial Protection Bureau (CFPB)’s market monitoring report on several Buy Now Pay Later (BNPL) companies. 

The CFPB report states that Buy Now Pay Later delivers clear consumer benefits, from lower costs to a simple repayment structure. According to the report, Buy Now Pay Later “imposes significantly lower direct financial costs on consumers than legacy credit products.” The CFPB also found that “BNPL is typically a no-interest product…fees are relatively low in absolute terms and do not compound as does credit card interest.”

The CFPB’s report mirrors polling conducted by Morning Consult on behalf of the Financial Technology Association, finding that BNPL helps consumers lead healthier financial lives. According to that polling, 82 percent of BNPL users trust the service, and 79 percent have a positive experience with it. Zero-to-low interest rates were the most important feature when selecting a Buy Now Pay Later payment option. 

“The fact is that consumers are choosing Buy Now Pay Later as a competitive alternative to high-interest credit products that trap them in cycles of debt,” said Penny Lee, Chief Executive Officer of the Financial Technology Association. “We look forward to continuing working with regulators like the CFPB to advance positive consumer outcomes.” 

FTA’s Buy Now Pay Later member companies are committed to business practices that prioritize the best interests of consumers, including: 

Complying with applicable consumer protection laws: The CFPB report acknowledges that BNPL providers “are subject to…federal and state oversight.” That includes applicable lending and licensure laws enforced by the CFPB, Federal Trade Commission, and state regulators. All BNPL products are subject to consumer protection laws and regulations, including anti-money laundering, fair lending, credit reporting, debt collection, privacy, treatment, and electronic fund transfers. 

Promoting consumer financial health and well-being: BNPL gives consumers an alternative payment option with zero-to-low interest. If a consumer misses a payment, BNPL restricts the use of their services until missed payments are fulfilled to prevent debt accumulation. That’s because BNPL’s business model depends on consumer success, unlike legacy credit products which profit when consumers cannot meet repayments. 

The Financial Health Network found that a majority of Americans – more than two-thirds – were not encouraged to spend more than they had originally planned if BNPL was offered as a payment option. Researchers at M.I.T have found that credit cards actually can increase a “willingness-to-pay” by anywhere from 50 to 200 percent. Morning Consult found that 77 percent of adults who reported using multiple Buy Now Pay Later companies at some point in time said it made it easier to pay for their purchases. 

Limited, One-Time Late Fees: For those pay-in-four BNPLs that charge late fees, they only charge a one-time, capped late fee and pursue no further recourse. According to the Financial Health Network, 96 percent of BNPL users had no difficulty making payments, and only four percent were late or missed one or more payments. In contrast, consumers who fall behind on credit card payments face compounding interest and excessive late charges; twenty-six percent of credit card users paid late fees in 2019, according to NerdWallet.

Ensuring Transparency: Nearly all consumers understand the terms and conditions of Buy Now Pay Later. The Financial Health Network found that 99 percent of BNPL users understood the terms and conditions, and Morning Consult found that 94 percent of users understood the terms and conditions of the service. 

Safeguarding Consumer Data: FTA’s Buy Now Pay Later members believe that consumers are entitled to high levels of data stewardship and privacy and do not sell consumer data to third parties. FTA’s BNPL members believe in credit reporting innovation that prioritizes the best consumer outcomes. They are in active conversations with the credit reporting agencies to modernize their scoring models and ensure that prompt repayment of BNPL products does not negatively impact credit scores. 

For more information on Buy Now Pay Later, read FTA’s “Just the Facts on Buy Now Pay Later.” 


The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.