Buy Now Pay Later: small instalments, a big risk of losing control

Buy Now Pay Later, often abbreviated to BNPL, has become one of the most common payment methods for online purchases and increasingly in physical shops too. The proposition is simple: buy today, pay part immediately and split the rest into a few instalments, often interest-free. This simplicity is its commercial strength, but also why it can be underestimated. While a conventional loan of 5,000 euros is clearly perceived as debt, three instalments of 60 euros may feel like merely a payment method. In substance, however, BNPL is also a form of credit. The Bank of Italy expressly describes it as a mechanism whereby consumers receive goods or services immediately and pay the price later, potentially in several instalments. The problem is not the individual transaction: it is how easily several small commitments can overlap without consumers noticing the total amount of future payments.

A small instalment changes how the price feels

Suppose we want to buy an item for 240 euros. Paying 240 euros today forces us to compare the purchase immediately with our balance and other monthly expenses. Splitting the price into four instalments of 60 euros makes the outlay feel psychologically lighter. But the price has not changed: we are still spending 240 euros. Only the timing of money leaving the account has changed. Using this mechanism simultaneously for five purchases can leave us with 300 or 400 euros in monthly instalments without ever feeling that we took on substantial debt.

The real risk is the combined commitments

Imagine four purchases made at different times:

No single instalment seems enormous. The problem is that a personal budget does not pay instalments in isolation: it must support them all together. Adding rent, car costs, utilities, subscriptions and other fixed expenses can quickly shrink the monthly buffer. BNPL therefore becomes especially dangerous when used without an overall view. Personally, I would treat it like any other debt: every instalment purchase should be recorded as a future commitment as soon as it is made.

“Interest-free” does not mean risk-free

Many BNPL products charge no interest if payments are made correctly. This can make them financially attractive compared with more expensive credit, but does not remove financial risk. Free debt remains a payment obligation. Late payments may also incur costs or other contractual consequences. The main risk, however, remains behavioural: buying more than we would if paying immediately. If instalments lead us to buy 600 euros of goods instead of 300, the absence of interest has not made the decision financially better.

BNPL is becoming significant in Italy too

In 2026, the Bank of Italy published a dedicated analysis of Buy Now Pay Later, highlighting its rapid growth. According to the data cited in the study, use in Italy increased significantly between 2022 and 2025, although a substantial proportion of users use the service only occasionally. The analysis also identifies greater uptake among financially more vulnerable people already carrying debt. This does not mean everyone using BNPL is in difficulty. But it explains why authorities are watching the product closely: easy access can encourage over-indebtedness when several facilities are used simultaneously or the consumer already has little financial room.

The new European rules and the transition period

The new European Consumer Credit Directive, CCD2, extends regulation to many Buy Now Pay Later transactions. Italy's implementing legislation, D.Lgs. 212/2025, requires providers to comply by 20 November 2026 or, if later, within ninety days of the entry into force of the Bank of Italy's implementing provisions. The transitional regime applicable to the contract must therefore be checked. The new framework strengthens transparency and creditworthiness assessments for many transactions within its scope. The logic is clear: if a product performs a credit function, consumers must receive appropriate protection even when financing is short-term, digital and apparently free. Exceptions and differing arrangements nevertheless exist, so not every simple deferred payment automatically falls under the same regime.

The scheduling problem

BNPL can create another less obvious effect: it charges today's consumption against future income. If I buy something in four instalments today, part of the next few months’ salary is committed before it is even received. This reduces flexibility. If an unexpected expense arrives next month, I am not starting from zero: part of my income is already allocated to past decisions. The more instalments I accumulate, the less scope I have to adjust spending when circumstances change.

One calendar for all commitments

The simplest way to retain control is to record every instalment purchase immediately in the future budget. If I agree today to four instalments of 75 euros, I do not count only the first 75 as spent: I recognise a total commitment of 300 euros and place the next three due dates in the correct months. This prevents the same future income from being mentally used several times for different purchases. Imagine disposable income of 1,700 euros and already committed expenses of 1,450. The buffer is 250 euros. Two purchases with instalments of 80 and 90 euros reduce it to 80 euros, even though each instalment alone seems modest. If a higher-than-expected bill arrives, the person may be forced to use more credit. BNPL risk often arises from this chain of events, rather than the cost of the first purchase.

When it can make sense

BNPL is not necessarily something to avoid. If the purchase would have happened anyway, the price is unchanged, there are no extra costs, the instalments are fully affordable and cash is retained for a specific reason, deferral can be neutral or even useful for cash flow management. The difference lies in why it is used. If I pay in instalments because the product improves cash management, the decision may be rational. If I do so because I could not otherwise afford the purchase, BNPL is enabling spending that current income does not support. This is where risk increases.

Returns, refunds and charges deserve attention

When goods are returned, the sales relationship and the payment arrangement may follow different timelines. It is sensible to check that the plan is suspended or updated, the refund is actually recorded and no automatic instalments remain due. Keeping order confirmations, return communications and account statements helps reconstruct the problem if records do not match. Before buying, I would also check the consequences of late payment, support arrangements and refund policies. “Interest-free” describes a plan performed correctly, but not necessarily all the effects of a missed payment. BNPL can be convenient within a budget that already has sufficient room; it becomes fragile when it makes spending unsupported by current income appear affordable.

The test I would apply before clicking

Before using BNPL, I would ask a very simple question: would I buy the same item today if I had to pay in full? If the answer is no, I would examine why. Perhaps I prefer retaining liquidity for a valid reason; or perhaps the price simply exceeds my budget. I would then look at all existing instalments, not just the new one. If I have 250 euros of monthly BNPL commitments and add another 100 euros, the purchase should be assessed as an increase in obligatory spending from 250 to 350 euros, not “only 100 euros a month”. Buy Now Pay Later works precisely because it reduces the perceived outlay. Using it consciously requires the opposite exercise: always reconstruct the total price and the sum of all future commitments. The instalments are small; risk arises when we stop adding them together.

Note. This article is for information only and does not constitute financial, credit or legal advice.