Source: Fortune
Buy-now-pay-later adoption has migrated from discretionary luxuries to essential goods—groceries, utilities, rent—revealing two distinct consumer economies: affluent households managing traditional credit, and working-class consumers for whom BNPL has become the de facto credit system. Rate hikes designed to cool inflation in one economy accelerate debt accumulation in the other, where BNPL lenders operate outside traditional rate transmission mechanisms and often charge consumers 15-30% APR regardless of Fed moves. The question for regulators is whether to treat BNPL as a credit system requiring oversight, or allow it to become a permanent two-tiered financial infrastructure that punishes lower-income consumers in ways the Fed cannot control.