The Rise in Delinquencies The rise in BNPL delinquencies has dampened the excitement the disruptive payment option once had. So let’s talk about it. One of the major reasons BNPL’s popularity has grown so rapidly is the accessibility the product offers. You don’t need a credit check, you don’t have to pay interest, some providers don’t even charge late fees for missed payments - the risk checkpoints that have historically acted as barriers for the credit unserved or underserved no longer exist. And without the data and risk technology in place to fill in those gaps, delinquency happens. And it’s happening at a rate of 2.39%, up from 1.83% in 2020, says a recent report by The Consumer Financial Protection Bureau (CFPB).
Delinquency rate increasing, currently at 2.39%
But what accounts for the uptick? One potential reason is financial inexperience. BNPL’s accessibility makes it easy for younger consumers to use. Easy access combined with inexperience can often produce negative outcomes. But unlike other mistakes of youth, these have billion dollar consequences.
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