This Staff Memo analyses the potential threats to financial stability posed by the “buy now, pay later” (BNPL) payment product. BNPL is a term used globally to describe credit, usually interest-free, offered in the e-commerce sector in particular, although there is some confusion over the concept. In this Staff Memo, BNPL is defined as e-commerce invoice purchases, which is the most common way BNPL is used in Sweden. These purchases generally involve interest-free credit as long as the consumer pays on time and are characterised by their integration into e-commerce platforms. The risks to financial stability associated with Swedish BNPL providers’ broader checkout solution, in which they manage the online trader’s entire checkout system, are also evaluated to some extent. The broader checkout solution includes BNPL as one of many payment options alongside for example cards, bank transfers and Swish.

To assess the potential risks to financial stability, the largest BNPL providers in Sweden and a number of other players involved in e-commerce payments in various ways have been interviewed. The potential risks are assessed using a three-part framework in which we analyse:

• the impact of BNPL on e-commerce payments
• the risks associated with the business model for BNPL
• the potential risks to the financial system as a whole should there be contagion effects from the failure of one of the BNPL providers.