Buy Now, Pay Later Market Update 2025

ANALYSIS REPORT JUNE 2025 Buy Now, Pay Later Market Update 2025

In brief Although the BNPL sector has grown strongly again, the number of payment problems is decreasing. The absolute numbers remain high. The implementation of the revised Consumer Credit Directive has begun. By November 2026 at the latest, the BNPL sector and large e-commerce platforms will fall under our supervision. There will be a legally mandatory age verification. We want this to enter into force as soon as possible. In addition, we support tightening the threshold amounts for creditworthiness assessments, verification, and BKR checks.

ANALYSIS REPORT Table of Contents

1. Introduction 3
2. Evolution of the market landscape 4 2.1 Market size 4 2.2 Users 4 2.3 Debt habituation 5 2.4 Financial health of BNPL users under 35 years 6
3. Payment behavior and consequences 10 3.1 Payment discipline and return behavior 10 3.2 Formal notice (Ingebrekestelling) 10 3.3 Default costs 11 3.4 Transfer to collection agency 12 3.5 Payment behavior by BNPL type 14 3.6 Pay later at large e-commerce platforms 15
4. Regulation and case law 17 4.1 Process update 17 4.2 Scope of new regulation 17 4.3 Creditworthiness 18 4.4 Age verification 19 4.5 Possibly unlawful costs 20
5. Conclusion 22 5.1 Growth and development of BNPL continues 22 5.2 In preparation for new regulation 23 Appendix: Methodology 25 Approach 25 List of sources 25

‘Buy Now, Pay Later’ market update 2025 3 ANALYSIS REPORT

1. Introduction 1 Due to the change in the research population, the figures in this market update are not directly comparable with the figures from our previous publications. This report follows an exploration in 2022 and a market update in 2024. The content of those two reports is assumed to be known. We do not intend to produce a standalone readable report.

Motivation and objective With Buy Now, Pay Later (BNPL), consumers can postpone the payment of their online purchase fully or partially until after delivery. It is often offered free of charge and sometimes for a small fee. BNPL offers consumers advantages, such as flexibility and the certainty that they only pay for what they actually receive and decide to keep. However, there are also risks, such as potential debt habituation and debt stacking. In November 2022, we published our exploration of the BNPL market. In April 2024, a first market update followed. Following both reports, there has been considerable social attention for BNPL. The objective of this second market update is to provide insight into the development of BNPL in the Netherlands since then. We focus in particular on the implementation of the revised Consumer Credit Directive. In this context, we support tightening the threshold amounts for creditworthiness assessments, verification, and BKR checks.

Guide In Chapter 2, we describe the evolution of the market landscape and share insights into the financial health of BNPL users under 35 years of age. The payment behavior of consumers is covered in Chapter 3, with attention also paid to large e-commerce platforms that offer pay-later services themselves. Next, we outline the latest developments in regulation and case law in Chapter 4. In Chapter 5, we have listed the main conclusions. Finally, in the appendix, we explain the methodology used to create this report.

Voluntary cooperation of market parties In this market update, we base ourselves in part on data that market parties have voluntarily shared with us. This concerns the four BNPL providers who have committed to a code of conduct, namely Billink, In3, Klarna, and Riverty. These are the same providers as in the previous reports, with the exception of Tinka, which is no longer active.1 Unless stated otherwise, the data points in this report refer to these four BNPL providers. In Chapter 3.6, we discuss the e-commerce platforms that offer pay-later services themselves. Amazon, Bol, and to a lesser extent Zalando have shared data regarding their use.

‘Buy Now, Pay Later’ market update 2025 4 ANALYSIS REPORT 2. Evolution of the market landscape 2 We have placed extra emphasis on certain information in some figures, for example by framing or shading this information.

2.1 Market size Number and total value of transactions increasing In 2024, BNPL providers processed approximately 53 million transactions with a total value of €5.1 billion. As can be seen in Figure 1, the number of transactions increased by 17% compared to 2023. The total value increased by 16%. The average transaction amount is fairly stable, just below €100.

Figure 1. Number and value of transactions2 2024 | 2023 | Change Total value of transactions | €5.1 billion | €4.4 billion | + 16% Number of transactions | 53 million | 45 million | + 17% Average value of transactions | €96.60 | €97.35 | - 0.8% Source: AFM data

The number of BNPL users increased slightly by 2.5% in 2024 compared to 2023. While the four BNPL providers had approximately 5.3 million users in total in 2023, this was about 5.5 million in 2024.

Existing users spend more via BNPL We see, on the one hand, a fairly stable number of users and a stable average transaction amount, and on the other hand, that the number of transactions and their total value are rising considerably. It appears that existing users are paying with BNPL more frequently and therefore spending more in total via BNPL. We note that we calculated the number of users by adding up the number of users of the four BNPL providers. This does not refer to unique users. A consumer using multiple BNPL providers is counted multiple times. It is not possible to correct for this.

2.2 Users Users per age group stable We see that the number of BNPL users in each age group is fairly stable, as shown in Figure 2. The largest increase is seen in the group aged 35 to 64 years (+5%). The number of users aged 18 to 24 years decreased by approximately 50,000. This is a decline of 6%.

Figure 2. Number of BNPL users in millions per age group Source: AFM data

Users under 65 years make 10 transactions per year; 65+ catch up Although the number of users per age group is fairly stable, it is noticeable in every age group that the average number of transactions has increased compared to 2023. As shown in Figure 3, the 65+ group is catching up. This group made an average of 4.4 transactions per user in 2023; in 2024, the average is 6.3. This is an increase of about 40%. Despite this increase, the average number of transactions still lags considerably behind that of other age groups. Users under 65 years pay with BNPL for their purchases an average of about 10 times per year.

Figure 3. Average number of transactions per age group Source: AFM data

2.3 Debt habituation In previous reports on BNPL, we expressed concerns about the normalization of buying on credit and debt habituation. By this, we mean a possible shift in the norm from saving first for purchases to buying on credit. In the AFM Consumer Monitor of spring 2024, we therefore asked some questions about this. The results are a reason for us to continue paying attention to this in the future.

‘Save-now-buy-later’ scores lower among BNPL users About three quarters of respondents agreed (completely) with the statement ‘People should always save first for a purchase, instead of borrowing money for it’. Or as Queen Máxima put it in 2022: ‘save-now-buy-later’. In Figure 4, it can be seen that respondents who reported using BNPL in the past 12 months agreed (completely) with the statement less often than non-users.

Figure 4. People should always save first for a purchase, instead of borrowing money for it Source: AFM Consumer Monitor spring 2024

More than half see BNPL as debt, and almost a third do not When consumers use a credit product, they incur debt. We asked respondents to what extent they actually saw the use of different credit products as incurring debt. In Figure 5, it can be seen that pay-later is seen as debt by about half (certainly), and by almost a third (certainly) not. BNPL scores better than the credit card. The credit card is seen as debt by more than 4 out of 10 respondents (certainly) and by almost 4 out of 10 (certainly) not. A personal loan is seen as debt by the vast majority.

Figure 5. Do you see the use of the following products as incurring debt? Source: AFM Consumer Monitor spring 2024

Certainty in online purchases can also be achieved without borrowing BNPL offers consumers the certainty that they only pay for what they actually receive and decide to keep in online purchases. Because it involves a loan, there are also risks, such as debt habituation and debt stacking. We therefore also encourage other new payment options that offer certainty without a loan component. Then consumers seeking this safety in online purchases are not dependent on a loan. This also helps consumers who may no longer qualify for BNPL if the sector must comply with credit rules from November 2026. We discuss these rules in Chapter 4.3.

3 This refers to payments to BNPL providers Billink, In3, Klarna, and Riverty.

2.4 Financial health of BNPL users under 35 years As of January 30, 2025, the AFM is a partner organization of the National Coalition for Financial Health. This is a coalition of public and private organizations that want to jointly build the financial health of Dutch households. In that context, we asked a bank for statistical insights regarding the financial health of consumers aged 18 to 34 who use BNPL. Our 2024 market update showed that this group of BNPL users is more likely to experience the consequences of missed payment deadlines than older users.

Approach and caveats regarding the insights The received data was obtained by taking a random sample of the bank's customers aged 18 to 34. Subsequently, it was mapped how many of these customers use BNPL. These are aggregated figures that cannot be traced back to individuals in any way. The BNPL transactions were identified based on the IBAN and the name of the counterparty.3

We believe the available data provides valuable insights. There are also a number of caveats. For example, the figures do not provide insight into the specific role of BNPL use in people's financial health. Furthermore, no comparison was made with the data of customers who do not use BNPL. Additionally, over- and underestimation of BNPL use is possible. We elaborate on these caveats at the end of this paragraph.

1 in 6 BNPL users under 35 is in the red for at least 3 months per year We consider the number of days per year someone is in the red as an indicator of their financial health. 1 in 6 BNPL users under 35 was in the red for a total of more than 90 days on their account in 2024. On these days, these users had a negative balance on their bank account. We note that we only have insight into the total number of days in the red in a year, but no insight into the number of consecutive days in the red. The days may therefore be spread throughout the year.

Figure 6. Percentage of customers in the red by age group and number of BNPL payments Source: AFM data

Figure 6 shows that the total number of days in the red increases with age. 10% of BNPL users between 18 and 20 years were in the red for more than 30 days. The percentage is 26% for users between 25 and 34 years. In addition, in this group, almost 1 in 5 users was in the red for more than 90 days. In the youngest group, this was less than 1 in 16. An explanation for these differences may be that higher age is usually associated with more financial obligations, such as housing costs, childcare, or insurance.

We further see that the number of users in the red is higher in groups that use BNPL more frequently. 27% of users who make an average of more than one BNPL payment per month were in the red for more than 30 days, and 19% even had a negative balance for more than 90 days. These percentages for users who make an average of at most one BNPL payment per quarter are 20% and 13% respectively. That frequent users have the most days in the red may indicate that they use BNPL for financial reasons.

BNPL users under 35 miss or reverse 10 direct debits per year We already noted above that frequent BNPL users have more days in the red. Missing and reversing direct debits is also an indicator of financial health. This concerns the collection of, for example, monthly rent, sports club membership, or health insurance premiums. Missing a direct debit means there was not enough balance in the account to execute the automatic deduction. Reversing means that the direct debit was initially executed but then reversed by the customer. This can be done within eight weeks after the deduction.

On average, users under 35 reverse or miss approximately 10 direct debits in 2024. This is a high number in itself. We also see an upward trend in Figure 7 as users make more BNPL payments. The number is highest for users who make an average of more than one BNPL payment per month. They miss or reverse 12 direct debits in 2024. That direct debits fail so often for BNPL users and that frequent users have more days in the red underscores the importance of both a suitable creditworthiness assessment and affiliation with the Foundation for Credit Registration (BKR). More on this in Chapter 4.3.

Figure 7. Average number of missed direct debits and reversals per customer by frequency of BNPL use BNPL payments | Number of missed and reversed direct debits per customer 1 to 4 | 9 5 to 12 | 11 13 or more | 12 Source: AFM data

2 in 3 frequent users under 35 are customers of multiple BNPL providers within one month By using multiple providers, it can become more difficult for consumers to keep track of their total expenditures. Providers also do not know from each other how much the customer still owes. The debts can mount as a result.

One third of BNPL users under 35 made a payment to more than one provider in 2024. We further see that frequent users are most often customers of multiple providers. 65% of users who make more than 12 BNPL payments per year do so with more than one BNPL provider within one month. This is in contrast to only 4% of users who make a maximum of 4 BNPL payments per year. It is also notable that users between 25 and 34 years make BNPL payments with multiple providers more often. 29% of these users paid multiple providers within one month. This was the case for 16% of users between 18 and 20 years. Figure 8 shows that as the user makes BNPL transactions more frequently or is older, they also make those transactions with multiple providers.

Figure 8. Percentage of customers using multiple BNPL providers by number of BNPL payments and age group Source: AFM data

Gaining speed with BKR affiliation Our analysis reveals several aspects that may indicate poor financial health for a portion of BNPL users under 35. For example, 1 in 6 users is in the red for at least 90 days per year. In addition, users miss or reverse an average of about 10 direct debits per year. Furthermore, 2 in 3 frequent users are customers of multiple BNPL providers within one month. As a result, consumers can build up significant debt in a short time. These insights underscore the importance of a suitable creditworthiness assessment. The affiliation of BNPL providers with BKR is also desirable, so that they can consult the debt register before providing services (see also Chapter 4.3). It makes sense for this customer group to do so even for lower transaction amounts. The average amount per transaction is €74, and 53% is €50 or less.

We called on the BNPL sector to affiliate with BKR at the end of 2022. The code of conduct of October 2023 contains a promise to investigate voluntary affiliation with BKR. We understand the technical adjustments required for affiliation, both at the BNPL providers and at BKR itself. At the same time, we note that affiliation by mid-2025 is still not arranged. We therefore call on the parties involved to gain speed with BKR affiliation.

4 Verification payments of €0.01 and parking fees (as far as appears from the name) are not included in the data.

No insight into the role of BNPL use in people's financial health A number of caveats apply to the insights mentioned above. The figures do not provide insight into the specific role of BNPL use in people's financial health. There is no visibility on the sequence of BNPL payments and indicators of financial health such as being in the red. Furthermore, no comparison was made with the data of customers who do not use BNPL. It could be that the financial health of non-users is actually worse and that these customers, for example, miss payments more often than BNPL users.

Over- and underestimation possible The insights are based on a random sample. This can lead to an over- or underestimation of BNPL use. The figures may concern products where payment is made directly4 or credit products where payment is made in one or three installments afterwards. Payments from a joint account are also assigned to both account holders. These caveats can lead to an overestimation of BNPL use. However, the chance of underestimation is also present. There is no insight into the number of transactions where a purchase was made with BNPL but no payment was made. This is the case if the customer does not meet the payment obligation or returns the order completely. There are also no insights available regarding the number of BNPL payments transferred to a collection agency.

‘Buy Now, Pay Later’ market update 2025 10 ANALYSIS REPORT 3. Payment behavior and consequences 5 We note that payment problems (or returns) do not always occur in the same calendar year as the original transactions. For the sake of readability, we describe our findings in terms of percentages of transactions per calendar year. We explain this in the appendix. 6 A consumer who has been formally notified by multiple providers is also counted multiple times. See also the methodology paragraph in the appendix.

In this chapter, we describe what portion of transactions is paid on time, and the process that follows if this does not happen.5 The emphasis is on what characteristics the customer has who does not or does not pay on time. The figures in Chapters 3.1 to 3.5 concern BNPL providers Billink, In3, Klarna, and Riverty. In Chapter 3.6, we discuss e-commerce platforms Amazon, Bol, and Zalando.

3.1 Payment discipline and return behavior Half to three quarters pay within the original payment term There is a huge difference between providers in the extent to which consumers pay transactions within the original payment term. For one provider, this is only half (54%). For the provider with the highest payment discipline, three quarters (77%) pay on time. This means that even in the best case, 1 in 4 customers does not pay within the original payment term. Not paying within the original term does not mean that the consumer is actually late with payment. It is often possible to extend the payment term.

No payment obligation for full returns In Chapters 3.2 to 3.4, we discuss the consequences of missing a payment deadline. It is important to note that there is no longer a payment obligation if the customer returns their order. This is the case for 1 in 9 transactions. For 3 in 10 transactions, at least one product is returned, resulting in a smaller payment obligation. In absolute numbers, this amounts to almost 11 million transactions in 2024 where at least one product was returned.

Although the return numbers are ecologically concerning, they fit the needs of BNPL users. The AFM Consumer Monitor shows that almost half of users want to see the product in person first, and about a third do not yet know at the time of purchase whether they will keep the product. We further note that return behavior is not limited to BNPL. It is a broader phenomenon within e-commerce, as also shown in the House of Representatives letter of December 14, 2021, from the State Secretary for Infrastructure and Water Management.

3.2 Formal notice (Ingebrekestelling) BNPL providers can take steps if a customer is late with payment. The Debt Collection Costs Act (WIK) stipulates that they must first formally notify the consumer before they can charge default costs. This is done via a formal notice. This is a written reminder to give the consumer a free final chance to pay the overdue payments within a certain period. The BNPL code of conduct also requires providers to send at least one free reminder before proceeding to formal notice.

Fewer consumers formally notified; absolute numbers remain high The number of BNPL users who received a formal notice decreased slightly in 2024 compared to 2023. This is positive, especially given the strong growth in the number of transactions (see Chapter 2.1). Nevertheless, BNPL providers formally notified approximately 2 million (non-unique6) users in total about 6.9 million times in 2024. This means that 38% of all BNPL users received a formal notice. Figure 9 provides a breakdown by provider.

Figure 9. Percentage of users who received a formal notice,