This paper analyses the phenomenon of short-term and interest-free instalment loans (Buy Now Pay Later or BNPL) within the existing economic and regulatory framework, at Italian and European level. It considers the potential implications of rising inflation, and of the resulting increase in interest rates, for the business models of BNPL operators. Lastly, it discusses the need to protect consumers from inadvertently piling up excessive debt.
The overall picture appears to be evolving: from a macroeconomic point of view, the increase in interest rates can have an impact on BNPL operators in terms of higher cost of debt and higher customer default rates; from a regulatory point of view, BNPL operators will likely be subject to more stringent requirements. Some operators are moving to adapt their business model to the new context, but the outlook for the sector remains uncertain.
