The phenomenon of Buy now, pay later (BNPL)translated into Italian as “Buy now, pay later”, This is an installment payment model which has quickly grown in popularity, spreading from the United States to Europe, thanks to the increase in online shopping and consumers' increased search for financial flexibility.

BNPL allows consumers to buy goods or services immediately and pay later, often in several installments or at pre-established deadlines. It works like a short-term loan, but without the interest typical of traditional loans.

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Regulation and consumer protection

Although this formula offers greater accessibility to goods and services and greater financial flexibility, raises concerns about the risk of over-indebtedness, especially among young people. BNPL practices can encourage impulse purchases and lead to unsustainable debt if consumers do not carefully assess their ability to repay.

Behind the simple payment option is often a real loan which may include interest and commissions. Some providers offer interest-free grace periods, but others may charge high rates once the interest-free installment period has expired.

Currently, the European Union's financial regulatory framework for BNPL providers is not harmonized. The European Commission has proposed a revision of the Consumer Credit Directive for greater transparency of transactions. Waiting for, the Bank of Italy is closely monitoring the BNPL sector [¹]to ensure consumer protection and financial stability.

Understanding the terms and conditions of these services is essential to avoid inconvenience. Integrating financial education into school curricula is a crucial element in combating the risks associated with the “buy now, pay later” principle. Through hands-on simulations, students develop financial skills that help them make informed decisions.

5 tips to avoid over-indebtedness with “Buy now, pay later”

Read the terms and conditions: Before using “Buy now, pay later”, make sure you know the reimbursement terms, prices and possible penalties in the event of late or non-payment. Conditions can vary significantly between different providers. Take the time to compare the options and choose the one that suits you best.

Make a repayment plan: Once you decide to make a purchase, create a debt repayment plan. Consider your monthly budget and make sure you have the funds to cover each payment. It’s important to treat BNPL like any other financial commitment.

Limit the number of BNPL purchases: It can be tempting to use the “buy now, pay later” principle to make multiple purchases, but this can quickly lead to accumulating debt. So make sure you completely finalize one payment plan before starting another.

Use BNPL out of necessity, not impulse: “Buy now, pay later” makes it easier to buy on impulse. If you use this formula for non-essential expenses, take a moment to evaluate your purchasing decision.

Monitor your credit score and debts: Although BNPL does not affect your credit score in the same way as a traditional credit card or loan, some providers may report late repayments to credit bureaus. Credit score is a numerical score that evaluates the creditworthiness of an individual or business. A high score makes it easier to access financing, while a low score reduces the chances of getting a loan.


[¹] Communication from the Bank of Italy on Buy now, pay later (BNPL)

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