US Regulators Launch Intensive Investigation into Rapidly Growing Buy-Now-Pay-Later Market

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] The U.S. regulatory authority, the Consumer Financial Protection Bureau (CFPB), has launched a high-intensity investigation into BNPL (Buy Now Pay Later) companies.

BNPL is a service where the company immediately pays the purchase amount on behalf of the customer, and then collects the principal from the customer in interest-free installments. It is gaining popularity mainly among the MZ generation, who have relatively low income but dislike incurring debt.

According to Bloomberg on the 16th (local time), the CFPB requested BNPL companies to submit data related to transaction trends, fees, insurance policies, and credit reporting. The targeted companies are Afterpay, Affirm, Klarna, PayPal, and Zip, and these companies must submit the relevant data to the CFPB by March 1 next year. The CFPB plans to publish a report on the investigation results.

The CFPB expressed particular concern about the lowering of lending thresholds due to the rapidly spreading BNPL transactions, especially among the MZ generation. Through BNPL transactions, consumers easily accumulate debt, companies gain more profits through arbitrage, and lenders collect consumer data to their advantage.

Rohit Chopra, Director of the CFPB, said, "BNPL companies allow consumers to receive goods immediately but at the same time provide debt."

This move came just one day after Democratic senators on the Banking Committee sent a letter urging action against BNPL companies.

Major foreign media interpreted this as "the boldest regulatory action in the currently fastest-growing fintech sector."

Klarna, one of the companies under investigation, stated, "Through this investigation process, the benefits of BNPL will be abundantly revealed," adding, "We will work with regulators to explain how our products are structured, used, and benefit both consumers and retailers."

Other companies such as PayPal and Afterpay did not issue any statements.

Meanwhile, according to Bank of America, the BNPL market size is expected to grow to $1 trillion (approximately 1,156 trillion KRW) by 2025, which is 15 times the current size.

This content was produced with the assistance of AI translation services.