Money Fix: Point of Sale lenders offer a new twist on ‘buy now, pay later’

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Buy now and pay later. That’s how it goes with point of sale lenders like Affirm, Afterpay, Klarna, QuadPay and Sunbit. According to new research from, consumers are increasingly turning to POS lenders to meet their financial needs.

Ted Rossman, industry analyst for explains how it works: “Point of sale lenders are sometimes called reverse layaway. Basically, they’re an alternative to traditional credit cards and loans. The consumer buys something (clothes, electronics, etc.) and gets it now (as opposed to traditional layaway in which you need to make all of the payments before taking the item home).”

You borrow at the store at the time of purchase and pay back the money over a specified period of time, unlike most credit cards that offer revolving credit. Some of the providers offer interest-free financing for a time (such as six weeks), whereas others charge interest right away, says Rossman.

These services are widely available. “Some of them are linked to participating retailers (such as Affirm, which partners with Walmart among others, and Afterpay, which partners with companies such as Forever 21, Mac Cosmetics and Billabong to offer loans). Others (like Klarna) can be used at any website (they give you a ‘ghost card’ number to input at checkout),” says Rossman.

So, you can easily get your hands on this alternative form of credit. Should you?

The pros

“These options can be convenient, accessible to people with lower access to credit, and their finite timelines can help prevent consumers from spiraling into debt. For someone with a limited credit file, it can also be an opportunity to build a good credit history,” says Arad Levertov, CEO of Sunbit, a fintech company based in Los Angeles that allows customers to split any payment at the point of sale into equal monthly payments.

Another plus, says Rossman: “Many consumers like the predictability of these plans; they know exactly how much they owe and how many months they have to pay it off.”

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