We need a debate on the risks to young people of buy now, pay later services

The growth of short-term purchase installment services (Buy Now, Pay Later or BNPL) among younger consumers, with companies such as Klarna, Afterpay, Affirm, Tabby and many others vying for a place next to the buy button on the most popular online shopping sites, and encouraged by Instagram and TikTok influencers raises a host of social responsibility issues.

Driven by viral trends and the pressure to buy on impulse, more and more people, especially young and inexperienced consumers with little understanding of how short-term credit works, are taking on repayments they simply cannot meet, incurring the financial penalties that really constitute the business model of these companies. The companies offering these repayment schemes, do not look into the creditworthiness of consumers, and grant them at a click without human intervention at the point of sale, usually a web page where the option appears next to the purchase button. In practice, the customers are often very young, eager to acquire a product they cannot afford, and who are not fully aware of the obligation they are taking on.

It’s clear what’s going on here: if consumers made their payments on time, this industry could not survive. Typically, purchases are split into four payments over six weeks, and the consumer has deadlines by…