How Old-Style Buy Now, Pay Later Became Trendy ‘BNPL’

Millennials and Gen Zers have an addictive new way to buy stuff that would look familiar to their great-grandparents. “Buy now, pay later” is a type of consumer credit that really got going in the 19th century when Singer sewing machines were sold for a “dollar down, dollar a week.” But the modern fintech twist in “BNPL” is that it’s aimed at people making impulse purchases of fashion or jewelry or electronics rather than sofas or refrigerators. It’s delivered through apps that have become popular, leading to high valuations of startups such as Klarna, Affirm and Afterpay. Regulators from the U.K. to Singapore worry that young borrowers are getting in over their heads, and there’s new competition from Apple Inc.

The “installment plan” is the precursor to today’s BNPL craze. Paying off purchases weekly or monthly evolved from 1840 onward, as makers of furniture, pianos and farm equipment looked to make products more attainable. Cars later brought installment credit further into the mainstream, though credit cards eventually became the preferred way to spread payments on smaller purchases.