‘All of us are going to pay’: 30% of Americans are taking out BNPL loans to pay for groceries, and it’s probably going to cost you

In the check-out line of your local grocery store, there's a nearly one-in-three chance someone there has used an app like Klarna or Affirm to finance their purchase of produce, milk, and eggs at some point. Their use of buy now, pay later could mean your groceries are about to cost more, economists have found.

A study from the University of Washington in St. Louis, which will be published in the next issue of the Management Science journal, found that as more consumers turn to buy now, pay later to purchase their necessities, retailers may actually increase prices and slash inventory as a result.

These types of purchases have become especially appealing for smaller, but necessary shopping trips. A Lending Tree survey of more than 6,000 U.S. consumers published in July found 29% of Americans self-report using buy now, pay later loans for groceries, nearly double the 14% from two years ago.

It's all part of a bigger trend of buy now, pay later becoming an increasingly appealing option for consumers as they face an affordability crisis of increasing healthcare and childcare costs, as well as stubbornly high inflation, with 91.5 million Americans using apps like Klarna, Affirm, and Afterpay to finance purchases. Purchases with these apps grew 20% from 2021 to 2025 , according to the Federal Reserve Bank of Richmond, though they still make up only about 1% of credit card transactions.

Researchers led by Panos Kouvelis, a professor of supply chain, operations, and technology at WashU's Olin Business School, set out to find what exactly would make this model appealing to retailers, who have to pay merchant fee for each buy now, pay later transaction. The study authors developed an economic model that captured not only consumers' willingness and ability to pay for goods using buy now, pay later, but also retailers' expected profits. They found that retailers increased their sticker prices to offset the merchant fee, meaning in some cases, customers paying in-full effectively subsidized the customers who financed their purchases, and all consumers saw higher prices.

"Retailers, as a result of accepting these kinds of payments, they are going to increase prices, which basically means that all of us are going to pay for these practices that are out there," Kouvelis told Fortune .

Why buy now, pay later might sting consumers and retailers alike

Retailers are feeling this pressure to raise prices particularly because of consumers' growing reliance on loans to pay for basics like groceries. Buy now, pay later was originally intended for large discretionary purchases like furniture or gaming consoles. These products have higher margins, meaning that for the retailers selling them to consumers financing the purchase, they would still be profitable even after paying the merchant fee. Necessities like groceries, however, have much thinner margins.