Buy now, pay later players, including Klarna and Affirm, are facing more competition as financial institutions begin offering installment payment options.<\/p>\n\n\n\n
The debit card has become the latest battleground between banks and fintechs over installment lending.<\/p>\n\n\n\n
As buy now, pay later players like Klarna Group and Affirm Holdings encroach further<\/a> into banks\u2019 traditional purviews \u2013 introducing new loan offerings and high-yield savings accounts \u2013 banks are responding to the competitive pressure with their own pay-later products.<\/p>\n\n\n\n Four of the five largest U.S. banks now offer installment lending plans on their credit card accounts. Last week, Bank of America introduced a new flexible-payment option<\/a> for its credit accounts, letting cardholders replace interest payments on particular purchases for a fixed monthly fee for terms of three to 18 months.<\/p>\n\n\n\n Meanwhile, JPMorgan Chase, the largest U.S. bank, also has a \u201cPay in 4\u201d plan<\/a> for debit card purchases of $50 to $400, allowing card users to split a purchase amount into four payments. The bank introduced the debit option three years ago, and assesses a $5 fee for missed or late payments.<\/p>\n\n\n\n These bank installment plans have emerged as buy now, pay later lending has grown in the U.S. \u2013 especially among younger consumers \u2013 fueled by marketing efforts from the larger players including Affirm Holdings, Klarna Group and PayPal Holdings. <\/p>\n\n\n\n \u201cThe very largest banks \u2026 to the extent that they have built BNPL so far, it has been a feature of their credit card offering,\u201d Wayne Pommen, Affirm\u2019s chief revenue officer, said in an interview last week. \u201cThis debit card-based offering is sort of new and unique, and we haven\u2019t really seen that much anywhere. So, we\u2019ll see how it plays out.\u201d<\/p>\n\n\n\n About 54 million Americans used a BNPL product in 2023, with an average loan of $135, the Consumer Financial Protection Bureau said in a December 2025 report, based on data from a half dozen large BNPL providers.\u00a0<\/p>\n\n\n\n Such BNPL loan originations surged from about 20 million in 2019 to 336 million in 2023, according to the CFPB survey. The agency queried Affirm, Block-owned Afterpay, Klarna, PayPal, Sezzle and Zip. <\/p>\n\n\n\n Since then, there\u2019s no sign that consumer interest has dropped off, especially given recent U.S. inflation and affordability pressures.<\/p>\n\n\n\n Bank of America, the second-largest U.S. bank by consolidated assets, devised its flexible-payment option because customers were \u201clooking for more structure on knowing what their monthly payment and terms would be,\u201d Lora Monfared, BofA\u2019s head of consumer credit card products, said Friday in an interview. BofA doesn\u2019t have a similar pay-later plan for debit cards. <\/p>\n\n\n\n Citi introduced a flexible payment option for its credit cards in 2019; the bank doesn\u2019t have a similar product for debit cards, a spokesperson said Tuesday.\u00a0<\/p>\n\n\n\n Last year, U.S. Bank, debuted a credit card<\/a> that lets holders split purchases into three equal payments over three months. The card allows holders to extend the repayment for a fee of 1.5% of the original purchase amount.<\/p>\n\n\n\n More than one third (37%) of U.S. adults \u2013 and half of those under 40 \u2013 used a BNPL product for a purchase within the past 90 days, market data and analytics firm JD Power reported in March from a survey of about 3,900 consumers.\u00a0<\/p>\n\n\n\n For banks, that survey came with another finding: BNPL users expressed higher satisfaction with the products from banks than those from traditional BNPL providers, JD Power said.<\/p>\n\n\n\n That presents traditional financial institutions \u201can enormous opportunity\u201d in the pay-later market, Sean Gelles, JD Power\u2019s senior director of banking and payments, said in a press release<\/a>. \u201cCustomers are looking for BNPL solutions from the brands they already know and trust,\u201d he said. <\/p>\n\n\n\n Still, as banks beyond the behemoths explore pay-later financing, Affirm is reaching out to the industry with a new product aimed at helping smaller banks and credit unions add BNPL-style lending to debit cards using Affirm\u2019s underlying technology.<\/p>\n\n\n\n Affirm\u2019s new service, introduced last month at the company\u2019s investor event<\/a>, aims to drive new revenue for the company by merging Affirm\u2019s pay-later solution into banks\u2019 debit accounts, an area of consumer finance that has traditionally resisted lending. <\/p>\n\n\n\n Affirm estimates that there are 130 million \u201cdebit first\u201d consumers who eschew credit cards, with the potential for $2,000 more in annual spending among this group. Overall, Affirm estimates $140 billion in annual spending among U.S. debit card users.<\/p>\n\n\n\n \u201cThere\u2019s an enormous opportunity to partner with those banks and bring them that functionality and allow them to capture BNPL spending in their own ecosystem,\u201d Pommen said June 11.<\/p>\n\n\n\n Most of Affirm\u2019s discussions to date have been with mid-sized and smaller banks, Pommen said. The new tech offering arose as part of flexible-financing partnerships Affirm inked with Fiserv<\/a> and separately with Fidelity National Information Services over the past 16 months<\/a> to integrate BNPL offerings into banks\u2019 debit accounts. <\/p>\n\n\n\n Affirm declined to provide details about the timing of the launch of the new service for banks or how many banks have signed on to integrate the debit product. The only bank Affirm has thus far disclosed as a customer \u2013 Old National, an Evansville, Indiana-based regional bank \u2013 declined to discuss pay-later debit card plans.<\/p>\n\n\n\n As part of its pitch to potential financial institution customers, Affirm says there\u2019s no credit risk with the new service and \u201cminimal\u201d integration work required. <\/p>\n\n\n\n \u201cWe can give them an offering that allows them to get the capability to serve the customer\u2019s need, to participate in the economics, without having to do really barely any technical lift,\u201d Pommen said. \u201cThat is music to their ears, and that general value proposition has been resonating.\u201d<\/p>\n\n\n\n Other banks are certainly watching pay-later growth among consumers, said Josh Miller, who oversees product development and consumer acquisition for KeyBank, a large regional bank based in Cleveland.<\/p>\n\n\n\n A BNPL product isn\u2019t an immediate priority for KeyBank but \u201cwe\u2019re constantly scanning the market landscape and prioritizing accordingly,\u201d Miller said in an April interview. \u201cIf we saw all of the herd all of a sudden launch a BNPL product that would certainly influence a potential change in our prioritization.\u201d<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" Buy now, pay later players, including Klarna and Affirm, are facing more competition as financial institutions begin offering installment payment options. The debit card has become the latest battleground between banks and fintechs over installment lending. As buy now, pay later players like Klarna Group and Affirm Holdings encroach further into banks\u2019 traditional purviews \u2013 […]<\/p>\n","protected":false},"author":2,"featured_media":60,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-59","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-credit"],"_links":{"self":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/59","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=59"}],"version-history":[{"count":1,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/59\/revisions"}],"predecessor-version":[{"id":61,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/posts\/59\/revisions\/61"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=\/wp\/v2\/media\/60"}],"wp:attachment":[{"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=59"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=59"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/law.petpolicyadvisors.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=59"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}