American Banker's 2026 BNPL Tradeoff Survey
American Banker’s 2026 BNPL Tradeoff Survey was fielded online during March of 2026 among 186 banking professionals who occupy a variety of roles across banks, credit unions, neobanks and payments firms.
Top findings from the report- The vast majority of respondents agree that BNPL creates some degree of credit risk to their institutions.
- At least 25% of all respondents felt that BNPL was a credible threat to credit card revenue.
- Credit unions had the largest percentage of respondents identifying BNPL firms as significant threats.
- Partner liability was the most moderate to significant compliance issue for banks offering BNPL through third parties.
- Institutions offering BNPL are using stronger monitoring protocols and risk models to offset risks.
Results from the report are highlighted below using interactive charts. Mouse over each section for more detail, click on the chart labels to show or hide sections and use the arrows to cycle between chart views.
This item is the end of a series diving into new research from American Banker. Click the links below to read the other parts of the overall research.
The possible credit risks posed by BNPL
Key takeaway: The vast majority of respondents agree that BNPL creates some degree of credit risk to their institutions.
BNPL is built on the premise that breaking down purchases into more manageable payments over a period of time can incentivize higher repayment and spending rates. But that isn't always the case.
Close to 90% of respondents who work at banks offering BNPL said the lending products create some degree of a credit risk for their institution (86%), while only 9% said BNPL poses no risk at all.
Credit risks are a valid concern for institutions still undecided on whether to offer BNPL to customers, but regulatory guidance and clearer legislation could help alleviate these worries somewhat.
Back in 2023, lead regulators with the Office of the Comptroller of the Currency issued
"Existing credit scoring systems are not designed to capture the very short-term nature and structure of BNPL loans," the guidance noted. "Incomplete reporting of BNPL loans could make it difficult for lenders to know the total dollar amount of debts and other obligations that applicants have before determining whether to approve them for new credit."
As recently as last year, institutions such as the New York City-based
"We as an organization aren't shying away from any data point that we feel will allow us to get our members to a financially well off place," Mike Savino, chief lending officer at the credit union, told American Banker. "As we start to do our research this year, and we're seeing a lot of these [BNPL] trends with our members, it's an opportunity for us to engage them, uncover their financial needs, educate them on buy now, pay later and then also educate them on how to use buy now, pay later to get to more traditional credit products."
Is BNPL a credible threat to credit card revenue?
Key takeaway: At least 25% of all respondents felt that BNPL was a credible threat to credit card revenue.
Many executives have heard the consumer demand for BNPL products, but remain concerned about the possible hit to credit card revenue should they begin offering the lending options.
For national banks, 16% were in agreement that BNPL stands to threaten how much revenue is generated from credit cards, while 19% disagreed with the sentiment and 53% were neutral.
One-third of regional banks agreed that BNPL is a threat against 45% that disagreed and 21% that neither agreed nor disagreed.
An equal share of community banks agreed and disagreed (each 25%) that BNPL is a threat to institutional credit card revenue, while 46% were neutral.
Credit unions were the most skeptical about BNPL, with 40% believing that the lending products are a credible threat to credit card revenue. Roughly 25% disagreed with the sentiment and 32% neither agreed or disagreed.
Banks integrating BNPL functionality into existing credit products are aiming to steer customers back to their institutions while still meeting the spending flexibility needs of consumers.
Closely following the January announcement by President Trump of a
Marc Butler, financial advisor and co-author of "Master Your Money," told American Banker that pressures on card issuers could create a sizable consumer push towards alternative credit sources like BNPL.
"BNPL will see a rush into the credit industry," Butler said. "Fintechs will leap in because they will be the lender of last resort."
Are BNPL providers a threat to banks, credit unions?
Key takeaway: Credit unions were the cohort with the largest percentage of respondents identifying BNPL firms as significant threats.
Banks and credit unions are divided on whether or not BNPL firms are significant threats to their operations.
Among banks currently offering BNPL, 32% agreed that companies such as Affirm and Klarna were significant threats. A nearly equal share (30%) of respondents felt the opposite and 33% were neutral.
For banks not currently offering BNPL but planning to do so sometime in the next 12 months, 26% identified BNPL firms as threats, 32% didn't consider them threats and 42% were neutral.
Fifteen percent of banks not offering or planning to offer BNPL within the next 12 months agreed that BNPL firms were threats, 49% did not agree and 34% were neutral.
Roughly 19% of national banks, 18% of regional banks, 25% of community banks and 32% of credit unions were all in agreement that these firms are a significant threat to business operations. By comparison, 37% of national banks, 39% of regional banks, 35% of community banks and 39% of credit unions didn't feel these providers were threats.
These firms and others are wading deeper into the financial service market with products more closely aligned with consumer needs, forcing banks and credit unions to rapidly adapt through outside partnerships or new offerings.
Earlier this year, following Trump's proposed interest rate cap, BNPL fintech Affirm started work on
"Many credit cards approve consumers once at the moment of application. But people's financial lives change, new jobs, lost jobs, raises, and everything in between," said Vishal Kapoor, senior vice president of product at Affirm, in a release.
The compliance headaches banks offering BNPL face
Key takeaway: Partner liability was the most moderate to significant compliance issue banks offering BNPL are facing.
As institutions scramble to build out BNPL offerings, many are left wondering what can be done to offset added compliance challenges.
Partner liability/oversight (56%) was the compliance issue that posed the greatest moderate to significant challenge to banks currently offering BNPL, followed by regulatory ambiguity/unclear guidance (52%) and settling and enforcing underwriting standards (52%).
Other notable compliance issues include consumer protection regulations (51%), ensuring data privacy/security (50%), state-specific requirements (49%), and affordability/ability-to-repay verification (49%).Institutions with the scale to do so have relied on developing BNPL lending offerings in house to avoid possible vulnerabilities through outside partners.
Citigroup originally launched its
"I feel we're well-positioned," Kartik Mani, head of Citi Retail Services, told American Banker. "We have a lot of data on our customers and do a lot of analysis that can provide insights to merchants."
How are institutions handling the risks associated with offering BNPL?
Key takeaway: Stronger monitoring protocols and risk models are how institutions offering BNPL are working to offset risks.
The top tactic for handling the risks that come with offering customers BNPL products is implementing stricter monitoring and risk models (39%), followed by strict credit controls (23%), limits and guardrails (21%) and offsetting the risk with revenue (13%).Financial education is a key component of success for consumers using BNPL, as failing to understand repayment terms and the general functionality of the product could leave many saddled with debt.
Speaking last year at a Fed conference on financial inclusion, Fed Gov. Michael Barr said that the rise in BNPL usage without adequate oversight could leave consumers in a
"[Consumers] may not understand what happens if they make a late payment, they may not understand what happens if they can't pay in full over the four payments or six payments," Barr said. "That can lead to the same kind of problems we've seen with payday loans, for example, so you can get caught in a debt trap, you can get caught paying excessively high fees or interest rates or fees when you thought the initial set of payments were going to be free."
