New Risks of Buy Now Pay Later in 2022: Lower buyer protection and higher prices with BNPL



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With apps like Klarna, Afterpay, and more continuing to explode in use in 2021, new risks have been found. While BNPL can be beneficial to those without access to credit, the lack of consumer protection is something anyone using these services needs to learn more about. Making a return? Disputing a billing error? You could be in for extra hassle. Know the risks before using Buy Now Pay Later in 2022, and find out how these apps might be changing in the near future.

00:00 Intro
00:32 Use cases for BNPL
01:18 Recap of how BNPL works
02:05 Who pays for 0% loans?
03:54 Why do merchants offer BNPL if it costs so much?
06:09 Fewer buyer protections with BNPL
07:44 Returning items can be a hassle
09:01 BNPL induces people to spend more
10:10 Lots of BNPL users miss payments
10:58 BNPL affect on credit scores
11:48 Regulatory reforms coming
12:29 Future of BNPL

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30 Responses

  1. Just me says:

    You're trying to make me not like BNPL. It has been a life saver (dramatic) for me. I have also returned with BNPL. It was easy.

  2. Mom Diane says:

    I used paypal pay in four for a water heater I didn't have the money for. I doubled the payment, and paid it off. I guess this is another form of payday loans. It may not be the best way, but not all of us are rich in the US. I just happen to see this, and decided to watch, and as even with credit cards you have to be careful. Thanks

  3. Paul h says:

    What a bunch of bs
    Cash is best but credit is the worst bnpl works just like cash without the interest and fees attached so compared bnpl is a better choice for the consumer

  4. Siri says:

    I had fraud on my card at Christmas which is hooked up to my bank account and I was told to no longer use it online. I tried to contact Sezzle 10 times no human responded just an automated response. I wanted to send an e-transfer or another form of payment. They only have bots so they aren't getting their money. How can they have a legitimate business with no human beings or telephone number?

  5. People are BROKE! Lol. BNPL is for your average person out here living check to check. All they care about is that I can get something I need right now without having to use every dime In my pocket.

  6. Timestamps
    00:00 Intro
    00:32 Use cases for BNPL
    01:18 Recap of how BNPL works
    02:05 Who pays for 0% loans?
    03:54 Why do merchants offer BNPL if it costs so much?
    06:09 Fewer buyer protections with BNPL
    07:44 Returning items can be a hassle
    09:01 BNPL induces people to spend more
    10:10 Lots of BNPL users miss payments
    10:58 BNPL affect on credit scores
    11:48 Regulatory reforms coming
    12:29 Future of BNPL

  7. I have a question.. this apps like klarna etc… Do they help to build credit !? Help somehow

  8. Poku Banks says:

    Informative video! Lots of BNPL users in the comments justifying their excessive use of the service and failing to understand the facts presented. I’m a fair man, if you’re financially literate these BNPL services are a gold mine – but it’s also allowing those with terrible credit scores to make use of easy credit. It also has helped businesses for sure, but I’m not sure which to side with? Be happy for businesses seeing a rise in revenue from implementing BNPL or be happy that those that couldn’t afford a payment right now be able to pay it in 4 instalments. One thing for sure the BNPL services are winning!

  9. BamRN19 says:

    I've used these services a couple times for items that are absolutely discretionary. After watching how these services work, I will take a step back and re-think my strategy. It has been useful in budgeting and getting my item right away, I think the simple wait and save approach is better for everyone, based on what you have presented here.

  10. km says:

    This video seems to paint an entire industry with a very broad brush.

    I just returned a product I bought online (with Klarna's 4 interest free payments) in-person at a store this weekend … without any trouble. I had only made two payments by that point, and both of them were automatically refunded.

    Also, I bought an airline ticket with Uplift's 4 interest free payments … only due every 30 days. 3 whole months. Kind of defeats your APR point (from the last video).

    I'm sure some BNPL companies are much worse than others, but you should perhaps actually look into which ones, and perhaps do a comparative analysis, instead of trying to paint a whole host of companies with a broad brush. It comes across rather silly.

  11. Taco says:

    BNPL is less harmful than having a credit card balance where VISA charges you 25% APR. The merchant loses an extra 4%? No they don't. The merchant is making a sale that they would not have made otherwise and also the BNPL has to take on inflation risk in a 7% interest rate environment. It's too bad people like you don't get it. Credit cards were looked at suspiciously in exactly the same way in the 1950s when people were using traveler's checks.
    This is extremely poor financial advice. Visa has 70% gross margins by charging people 25% APR, all of these people should and eventually will migrate to BNPL services where they are exploited less.

  12. Neill James says:

    Shame Amazon stopped taking credit cards, they should have given option to pay a standard credit card fee.

  13. mcse38 says:

    Thank you for your videos, as I am an online store and I was thinking of adding this to my website. I don't think it a good deal for us as merchants to loose money when we have fees we have to pay.

  14. Will decreasing the fee to a maximum of 4% make the bnpl concept appealing to you ❓

  15. Randall Wade says:

    Lol we still gone use BNPL bro.

  16. Doc Croc says:

    As an australian, i'll be okay if retailers add the bnpl fee for customers to counter their costs, though ive only used bnpl payments for smaller companies and businesses who are more in need of each cent of profit they can get over say, amazon or Big W etc.

  17. Ms Maree says:

    I’ve watched both your videos and I don’t see the harm with BNPL! You’re reaching.

  18. Kevin g says:

    idk the first video was ok but this is starting to seem like propaganda. Merchant are always looking for an excuse to raise prices, most of these services are used at major big box retailers whom have seen record profits . I cant make sense of a scenario where the consumer is spending more and buying more and the merchant loses money. I think most of the push back comes from the disruption in the industry , Its the typical plutocratic/ argument . the whole" you don't get to get what I get "… these services actually help the consumer period. Like anything there will be abusers or people getting in over there head. but most services have pretty good risk management

  19. TT Watt says:

    I don't mind the buy now pay later option. It helped me out through the holidays, but I made sure to pay on time. But anything that has to do with money will always have its consequences. Thank you for educating me more on buy now pay later.

  20. Well this was a lot more useful than the previous video… still haven't earned my subscription yet though lol

  21. Great video! Best advice I should have followed is "If you can't pay cash, you can't afford it"

  22. habbsterr says:

    I think that you were overly critical of BNPL payment methods. While it is true that its always best to use liquid cash to make purchases and stay out of debt, for many people that vacation flight to Florida or those pair of designer boots are out of reach unless they can spread the payments out evenly.

    Life is about balance: being financially responsible ≠ not being able to indulge in luxuries.

    If anything, choosing a BNPL option for those sporadic indulgent purchases is the fiscally responsible thing to do since it allows you maintain your cash flow and avoid upsetting a balanced budget.

    Is it perfect? No.
    But neither is the stock market.

    Like most things in life, it's highly circumstantial and depends on an individual's personal circumstances.

    I use credit cards, keep my utilisation under 30% and pay the entire balance every month. Other people may carry a balance or use cash, etc…

  23. Ben Kennedy says:

    Great explanation, as always. Shouldn't the inflation argument (prices will go up if BNPL use becomes pervasive) be made about use of credit cards, especially premium ones, in general? Granted the discount rate seems to be several-fold more with BNPL, but the principle seems to be the same. It's a conundrum: as a consumer, it seems foolish not to use whatever premium credit products I'm eligible for, because otherwise I'm leaving money (or at least perks) on the table.

  24. xavytex says:

    I don't think people will really care that retailers lose 6% profit instead of 2.5% with credit card payment. It's everybody for themselves. See what happens with returns ? People don't care that Amazon pays for "free shipping" twice for a product they return. Some people order 5 pairs of shoes to try them at home and return 4 (or 5). Who cares, it's "free shipping". Good video, as usual, thanks !

  25. MK says:

    Glad you said true emergencies are a justification for BNPL because I truly need a Tom Brady autographed card

  26. I've spent thousands on klarna and afterpay alone but one thing you didn't mention are the awards they offer as well as discounts at certain retailers, I lost count of how many $5 Amazon gift cards I've gotten but it's over 50 bucks at this point

  27. Amit M says:

    I always thought BNPL was a devious thing. Thanks for confirming it!

  28. Ahamed says:

    the best new info for me was the payment dispute if you do not get your order as it will hit your credit score.

  29. Mrbrown says:

    and why again do I have notification's on? Like great video and all but now I have paranoia that someone hacked my account.

  30. I use credit cards for their consumer protections. This ultimately drives up the price of goods and services too. So the point of driving up costs is negligible to me.

    Nonetheless I will never use Buy now pay later as I immediately pay down credit card balances and have no need for such an option.

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