In neighborhoods across America, a troubling pattern has emerged: consumers are increasingly turning to financial services like Affirm, Klarna, and Afterpay to purchase everyday necessities as prices continue to climb. This convergence of rising retail prices with readily available buy now, pay later (BNPL) financing represents a fundamental shift in how Americans manage household budgets and navigate economic insecurity.

Meanwhile, Walmart has implemented multiple price increases across its stores, citing ongoing supply chain pressures, labor costs, and inflation. For millions of Americans already walking a financial tightrope, these dual trends have created a perfect storm that threatens long-term financial stability.

Let’s take a closer look at what this means for American consumers such as yourself…

The rise of prices, and BNPL, for essentials

Walmart, long known for its “everyday low prices” mantra, has incrementally raised prices across multiple product categories since 2023. For example:

• The price of bananas, imported from Costa Rica, rose from 50 cents per pound, to 54 cents.
• Car seats made in China that currently sell for $350 at Walmart will likely cost customers another $100.

These price hikes have been particularly pronounced in Walmart’s private label “Great Value” products, which have historically served as budget alternatives for price-conscious shoppers.

According to Forbes, the number of US consumers who are using BNPL transactions for groceries and household essentials have grown by 14% in 2024 and 21% in 2023. Walmart’s integration with multiple BNPL providers has facilitated this trend, with in-store signage and checkout prompts actively promoting these payment options (groceries now accounting for roughly 60% of Walmart’s U.S. business).

Walmart has aggressively incorporated BNPL options into both its online and in-store shopping experiences. The retailer currently partners with Klarna, offering prominent placement of this service at checkout. In-store, cashiers are reportedly instructed to mention BNPL options to customers whose transactions exceed $50.

The pitfalls of BNPL for consumers

BNPL services, which allow consumers to split payments into installments—typically interest-free if paid on time—initially gained popularity for discretionary purchases like electronics and fashion. However, their usage has drastically shifted in recent years.

BNPL (Buy Now, Pay Later) services can be harmful to consumers for several key reasons:

1. Hidden debt accumulation: They make it easy to accumulate multiple small debts that add up quickly, often without the consumer fully realizing their total financial obligations.
2. Lack of regulatory protections: Many BNPL services operate in regulatory gray areas with fewer consumer protections than traditional credit products.
3. Late fees and penalties: They often charge significant late fees that can make purchases much more expensive than the original price.
4. Impact on credit scores: Some BNPL services report late payments to credit bureaus, potentially damaging credit scores, while not reporting on-time payments that would build credit.
5. Psychological disconnect: They separate the pleasure of purchasing from the pain of payment, making it easier to overspend.
6. Normalization of debt for essentials: As noted in the article, they’re increasingly being used for necessities like groceries, creating ongoing financial obligations for items that have already been consumed.
7. Limited underwriting: Many BNPL providers conduct minimal creditworthiness checks, potentially allowing consumers to take on debt they cannot afford to repay.
8. Encouragement of impulse purchases: The “pay in 4” model reduces the perceived cost, encouraging consumers to make purchases they might otherwise reconsider.

Who bears the burden?

According to Numerator, their data indicates that BNPL users tend to be Gen Z or Millennial multi-cultural, urban families earning under $60,000 per year. Factoring in cost of living, household size, and regional differences, these users are 42% more likely to fall into the lower third of purchasing power. They also make 28% more grocery trips using SNAP benefits when compared with non-users.

 Gen Z and Millennials are 50% more likely than average to use BNPL for experiences—think concerts and festivals—and they are also more inclined to finance personal travel and exercise equipment. Numerator’s findings suggest that 39% of BNPL users leverage these services for holiday purchases, and 36% do so around large retail sales events. Purchasing data further shows BNPL users contribute a higher share of their general merchandise purchases during holidays and Amazon Prime Big Deal Days.

Current regulatory framework

BNPL services occupy a regulatory gray area that has allowed for rapid growth with minimal oversight. Unlike credit cards, which are governed by the Truth in Lending Act and require specific disclosures, many BNPL providers have operated under more limited regulatory constraints.

The Consumer Financial Protection Bureau issued its first comprehensive report on BNPL services in September 2023, highlighting concerns about debt accumulation, data collection, and regulatory arbitrage. However, comprehensive federal regulations specific to BNPL have yet to be implemented.

Several states, including California and Massachusetts, have introduced legislation requiring greater transparency from BNPL providers, particularly around late fees and credit reporting practices. These efforts remain piecemeal, creating an inconsistent landscape of consumer protections.