The Consumer Financial Protection Bureau (CFPB or Bureau) released a new market “data spotlight” on Buy Now, Pay Later (BNPL) that uses actual transaction data from six large providers of “pay-in-four” BNPL loans. The report paints a picture of growing adoption paired with improving credit performance: late fees fell and charge-off rates declined in 2023, even as the number of loans and users rose.

At a high level, the CFPB finds that BNPL originations continued to grow in 2023, but at a slower pace than prior years. Across the six companies, lenders originated 335.8 million BNPL loans totaling $45.2 billion, with an average loan size of $135 (inflation-adjusted). The user base expanded as well: 53.6 million consumers took at least one BNPL loan in 2023, and average usage increased to 6.3 loans per user per lender, with an average annual BNPL loan amount of $848 (inflation-adjusted). While adoption is broadening, the CFPB notes BNPL spending still represents roughly 1% of total credit card spending volume.

Credit performance improved meaningfully. In 2023, 4.1% of BNPL loans were assessed a late fee (down from 5.2% in 2022), and late fee revenue collected fell to 0.18% of Gross Merchandise Volume (GMV). The share of loans charged off dropped from 2.63% in 2022 to 1.83% in 2023, with charged-off dollars falling to 0.92% of GMV — the lowest level in the five-year survey window. The CFPB attributes some of this trend to tighter underwriting and more focus on increased usage among existing customers.

The CFPB is careful about scope and limitations. The report focuses on “pay-in-four” BNPL loans — typically four equal, interest-free installments with a 25% down payment at checkout and three payments due in two-week intervals — and does not include point-of-sale installment loans or credit card installment plans that some BNPL firms also offer. The dataset is aggregate (not loan-level) and firm-specific.