WASHINGTON — Use of buy now, pay later loans continued to rise in 2023, while credit performance improved, with fewer late fees and lower charge-off rates even as more consumers used the products, according to a new report from the Consumer Financial Protection Bureau.
The CFPB said in a market “data spotlight” released that six large providers of so-called “pay-in-four” BNPL loans originated 335.8 million loans totaling $45.2 billion in 2023. That marked continued growth, though at a slower pace than in earlier years. The average loan size was $135, adjusted for inflation, according to the CFPB.
As the CU Daily has been reporting, usage of BNPL financing has only increased in 2025.
Number of Consumers Increases
The number of consumers using BNPL also increased. About 53.6 million people took out at least one BNPL loan during the year, the bureau said. Average usage rose to 6.3 loans per user per lender, with an average annual BNPL loan amount of $848, inflation-adjusted. Despite the growth, BNPL spending still accounted for roughly 1% of total U.S. credit card spending volume.
Credit performance improved notably, according to the report. About 4.1% of BNPL loans incurred a late fee in 2023, down from 5.2% the year before. Late fee revenue declined to 0.18% of gross merchandise volume.
Charge-offs also fell, the CFPB said. The share of loans charged off dropped to 1.83% in 2023 from 2.63% in 2022, while charged-off dollars declined to 0.92% of gross merchandise volume — the lowest level in the CFPB’s five-year survey period.
Underwriting Standards May Play Role
The Bureau said the improvement may reflect tighter underwriting standards and a greater focus by lenders on increased usage among existing customers rather than rapid expansion to new borrowers.
The CFPB cautioned that the findings have limits. The report covers only “pay-in-four” BNPL loans — typically four equal, interest-free payments with a 25% down payment and installments due every two weeks — and excludes longer-term point-of-sale installment loans and credit card installment plans offered by some BNPL firms, according to the CFPB.
