Buy Now, Pay Later: Flexible Shopping or Financial Trap?

It blinks temptingly next to the shopping cart button, promising immediate wish fulfillment without immediately charging your account. "Buy Now, Pay Later" (BNPL) is on the rise – and how! Did you know that according to a Riverty survey, one-third of all online purchases in Germany in 2023 were paid via BNPL? (Source: E-Commerce Magazine).

No wonder, because BNPL sounds super practical at first. But how exactly does it work? Which providers are there? And above all: Is it really as risk-free as it often seems, or are there hidden costs and dangers lurking, especially if you want to keep a close eye on your expenses? In this post, we take a close look at BNPL in Germany so that you can make an informed decision.

What Is Buy Now, Pay Later (BNPL) Actually?

Basically, BNPL is a type of short-term credit offered to you when shopping. Instead of paying the full amount immediately, you can choose:

1. Pay Later: You receive the goods immediately but pay the invoice only after a certain period (often 14 or 30 days). This is basically the classic purchase on account, just often processed through an external service provider.
2. Installment Payment (Online Partial Payment): You split the purchase amount into several smaller installments, which are due over a few weeks or months.

The trick: Often advertised with "0% interest," at least for the short payment pause or the first installments. The processing is usually not handled by the merchant themselves but by a specialized financial service provider.

Who Offers BNPL in Germany? An Overview of the Market Leaders

The German BNPL market is in motion and growing rapidly. You probably already know some providers:

• Klarna: The Swedish giant is probably the best-known BNPL provider. With over 15 million active customers in Germany (Source: Onlinehändler News), Klarna is widespread. Interestingly, not only young people use Klarna – even among Millennials (approx. 26-41 years), it's 43% and among Generation X (older 30s/40s), still 36% who specifically choose Klarna's BNPL function (Source: Facebook/Opresnik).
• PayPal "Pay Later": Almost every online shop offers PayPal. And where PayPal is, the "Pay Later" option (payment after 30 days or installment payment) is often not far behind. According to EHI, almost 95% of the top 1,000 online shops offer PayPal (Source: EHI Online-Payment Study 2023). This makes this BNPL variant extremely widespread.
• Afterpay (now part of Riverty): This provider is also growing strongly in Germany. Exact user numbers are rare, but indicators such as revenue growth of around 100% in the 2021 financial year (Source: FinanceFWD) and a general increase in small loan contracts by about 30% (often through BNPL) (Source: Cardscout) show the dynamics.
• Ratepay: This provider specializes in invoice purchases and installment payments and is particularly popular with merchants with higher-priced assortments such as electronics and furniture. Here, customers appreciate the option to finance larger purchases through installments (Source: Ratepay).

The Sunny Side: Why Is BNPL So Popular? (Advantages)

The growing popularity of BNPL doesn't come from nowhere. For you as a customer, there are some clear advantages:

• Flexibility: You don't have to come up with the full amount immediately but can postpone or split the payment. This creates financial leeway.
• Convenience: The process is usually seamlessly integrated into the checkout and completed with just a few clicks.
• Check first, then pay: This is particularly practical when buying clothes or shoes online. Around 45% of BNPL users appreciate being able to check the goods at leisure before paying (Source: E-Commerce Magazine). This reduces the risk of a bad purchase.
• Sometimes interest-free: Many providers entice with interest-free payment terms (e.g., 30 days) or installment plans without surcharge.
• Bridging bottlenecks: If an important purchase is pending, but your salary isn't coming until next week, BNPL can be a short-term solution.

BNPL is also worthwhile for merchants: Studies show that offering such options can increase willingness to buy (conversion rate) and even the average shopping cart value. For example, a study by the University of Frankfurt in cooperation with Ratepay found that a BNPL offer at a furniture retailer could increase sales by about 20% (Source: Ratepay/Uni Frankfurt).

The Dark Side: What Should You Watch Out For? (Disadvantages & Risks)

As tempting as BNPL sounds, it's important to know the potential disadvantages and risks - especially if you want to keep your finances under control:

1. Danger of Over-indebtedness: This is the biggest risk. The easy availability and small installments can tempt you to buy more than you can actually afford. You can quickly lose track of the many open amounts with different providers. The Consumer Center NRW expressly warns that BNPL can trigger a "cost spiral with high interest rates and fees" and, in the worst case, lead to a debt trap (Source: Consumer Center NRW). Debt counseling services like Diakonie also report in 2024 about increasingly more problem cases due to BNPL (Source: Diakonie Deutschland).
2. Hidden Costs and Fees: The advertised "0% financing" often only applies for a short period or under certain conditions. If you miss a payment deadline, high reminder fees and default interest can accrue. For installment payments over longer periods, interest is often calculated from the outset. The Consumer Center NRW also criticizes the lack of transparency with some providers (e.g., Klarna): Often, multiple purchases are bundled in one contract, making it difficult to keep track of individual claims (Source: Consumer Center NRW). Small installments can quickly make the total debt seem larger than it appears at first glance.
3. Impact on Your SCHUFA and Creditworthiness: Yes, BNPL can also influence your creditworthiness! Legally, it's often a credit agreement. Birgit Vorberg from the Consumer Center NRW warns: Many small BNPL loans can ruin creditworthiness because you quickly lose track (Source: FinanceFWD). Until now, many BNPL loans under 200 euros were often granted without a SCHUFA check and not reported. The problem: You could easily accumulate many such micro-loans without it being noticed (Source: Cardscout). Important: If you miss payments, it can lead to a negative SCHUFA entry!
4. Data Protection: With every BNPL transaction, in addition to you and the merchant, other third parties are involved (Klarna, PayPal, Ratepay, etc.). This means you share your personal and financial data with additional companies. These usually conduct a creditworthiness check, often via credit bureaus such as SCHUFA. These inquiries and the loans themselves can (depending on their structure) influence your score.

Practical Example: Anna's Furniture Purchase – How BNPL Can Look

Imagine Anna wants to buy a new sofa for €800. The online shop offers various payment methods, including BNPL via Provider X:

• Option 1: "Payment in 30 Days": Anna gets the sofa immediately and only has to pay after 30 days. If she pays on time, no additional costs are incurred. Great if she's waiting for her next salary.
• Option 2: "Installment Payment over 12 Months": Anna pays about €70 per month for 12 months. Sounds manageable at first. But: Provider X charges, for example, 9.9% interest p.a. effectively. In the end, Anna doesn't pay €800, but about €840. She needs to be aware of this.
• The Risk: Anna forgets to pay after 30 days (Option 1) or can't pay an installment (Option 2) on time. Now Provider X sends a reminder with reminder fees (e.g., €5) and charges default interest. If she still doesn't pay, collection proceedings and a negative SCHUFA entry are threatened.

This simple example shows: BNPL can be practical but involves additional costs and risks with interest or late payment.

Using BNPL Responsibly: Your Checklist

So that you can use the advantages of BNPL without falling into the trap, here are a few tips for conscious handling:

1. Budget Check: Before each purchase, ask yourself if you could afford the product if you had to pay for it immediately. BNPL should not be a permanent solution to live beyond your means.
2. Keep Track: Use a maximum of one or two BNPL providers and keep track of your open payments and deadlines. Many providers have apps that help with this - use them actively!
3. Understand Terms and Costs: Read carefully: Are there interest charges? How high are reminder fees? What deadlines apply? Don't be blinded by "0%" advertising.
4. Pay on Time: Set reminders or use standing orders to avoid missing a deadline.
5. Check Alternatives: Is the purchase really necessary? Can you perhaps save up or are there cheaper alternatives?
6. Caution with Many Small Amounts: Many small BNPL purchases in particular can quickly add up and make it difficult to keep track.
7. Seek Help: If you notice that you're losing track or payments are becoming difficult, seek help early from a debt counseling center (e.g., from Caritas, Diakonie, or Consumer Centers).

Legal Aspects & Current Trends: What's Changing?

The legislator has recognized the risks of BNPL. An important change is imminent: In the future, EU-wide mandatory creditworthiness checks for BNPL loans under €200 will be introduced (Source: Cardscout). This should help to better prevent over-indebtedness. SCHUFA is also working on special procedures to fairly evaluate BNPL data without unnecessarily burdening the score (Source: FinanceFWD). Consumer advocates are also calling for more transparency regarding costs and data processing.

Conclusion: BNPL – Your Conscious Handling Decides

Buy Now, Pay Later is a convenient payment method that can offer you flexibility when shopping online. The possibility to check goods first or split larger purchases is attractive.

But: BNPL is not a free pass for unlimited consumption. The risks – above all the danger of over-indebtedness due to lack of overview and hidden costs – are real. Especially for you as someone who deals consciously with money, it's important to use BNPL with caution.

Use it as a tool, not as a crutch. Keep track of your expenses, understand the conditions, and pay on time. Then BNPL can be a sensible addition to your payment options. But if you notice that it tempts you into impulsive purchases or you lose track, you'd better steer clear of it.