Buy now, pay later is moving deeper into everyday spending, and new research suggests the shift could create an unexpected cost for shoppers who never use installment financing at all.
Researchers at Washington University in St. Louis and Shanghai Jiao Tong University found that retailers offering BNPL can respond to financing fees by raising the sticker price charged to everyone. Their economic model also found situations in which retailers stocked less inventory even as financing allowed them to sell more units.
The findings are not evidence that BNPL has already caused grocery prices to rise across the United States. The study, forthcoming in Management Science, is based on an economic model and millions of simulated scenarios rather than observed price increases at supermarkets. It does not calculate how much current grocery inflation is attributable to installment financing.
That limitation matters. Grocery prices were 2.2% higher in August than a year earlier, according to the Bureau of Labor Statistics, but food prices are influenced by labor, transportation, commodities, tariffs, supplier costs and numerous other factors. The new study identifies a potential additional pricing mechanism rather than measuring BNPL’s real-world contribution to those increases.
The financial issue is becoming more relevant because consumers are increasingly using installment loans for purchases that once would have been paid immediately.
LendingTree found that 29% of BNPL users surveyed in 2026 had used the loans for groceries, up from 14% two years earlier. That does not mean 29% of all Americans are financing groceries through BNPL.
Federal Reserve data paint a more restrained picture. About 16% of U.S. adults used BNPL during 2025, and 20% of those users said they had financed groceries or food delivery. Use was highest among consumers with limited emergency savings.
Merchant Fees Can Change the Retail Math
A standard pay-in-four transaction allows a shopper to divide a purchase into four installments, often without paying interest if payments are made on schedule.
The financing is not free to the merchant.
Providers such as Affirm, Klarna and Afterpay typically receive compensation from retailers for facilitating transactions. The retailer receives payment upfront while the BNPL provider assumes the responsibility for collecting from the customer.
That fee structure helps explain why merchants offer the service in the first place. Financing can convert shoppers who otherwise would abandon a purchase, increase basket size and bring additional customers into a transaction.
The WashU model shows the trade-off.
Once a retailer pays a portion of a financed transaction to the BNPL provider, the amount it actually keeps from the sale falls. One potential response is to increase the common retail price. Because merchants generally do not charge separate shelf prices depending on whether someone pays cash, by card or through BNPL, shoppers who pay immediately can indirectly absorb some of the financing cost.
The model also found that higher unit sales do not necessarily mean higher retailer profits. In some simulated markets, the merchant sold more goods after introducing BNPL but retained less value from each transaction. Researchers also found circumstances in which the retailer reduced inventory because the economics of losing a potential sale had changed.
Those effects become more relevant for low-margin necessities than for discretionary merchandise with greater room to absorb financing costs.
For BNPL providers, merchant economics are central to the business model. Affirm reported $1.15 billion of merchant-network revenue in its fiscal 2026 year, up 30%, and said that revenue consists primarily of fees charged to merchant partners based on merchandise volume processed through its platform. Affirm generated $4.26 billion in total net revenue for the year.
If retailers increasingly view BNPL fees as difficult to absorb on low-margin purchases, providers could face pressure to reduce merchant pricing. The alternative is that retailers continue accepting the fees because higher conversion and transaction sizes compensate for them.
Groceries Show Where BNPL Is Changing
The move into food also raises a different concern: consumers may be borrowing because they lack enough cash for necessities rather than because installment financing makes a large discretionary purchase more convenient.
Federal Reserve researchers found that 45% of BNPL users who financed groceries or food delivery said the main reason for using the service was that it was the only way they could afford the purchase.
Those borrowers also experienced more repayment problems. Forty-three percent of BNPL users who financed groceries or food delivery reported either being charged extra for paying late or triggering an overdraft or insufficient-funds fee, compared with 21% across BNPL users overall.
Separate research from the Urban Institute found nearly one in 10 working-age adults used BNPL to purchase groceries in 2025. Among that group, 34.8% missed at least one payment.
Those numbers make grocery BNPL a useful indicator of household financial pressure even if the total dollar volume remains small compared with conventional consumer credit.
BNPL is still far from replacing credit cards. Its attraction is that it can provide fast access to short-term financing without requiring consumers to revolve a credit-card balance. For retailers, meanwhile, rejecting BNPL carries its own risk if competitors continue offering it and customers increasingly expect installment options at checkout.
The unanswered question is how far the model spreads into everyday purchases.
If BNPL remains concentrated in discretionary categories where margins are large enough to absorb merchant fees, the pricing effect identified by the WashU researchers may remain limited. If financing becomes routine for groceries, household supplies and other low-margin necessities, merchants will have stronger incentives to renegotiate fees, raise prices, reduce inventory or reconsider whether offering the payment option is worthwhile.
For companies such as Affirm and Klarna, continued BNPL adoption is therefore only part of the growth equation. The more important test will be whether merchants still find the economics attractive as installment financing moves from couches and electronics into milk, eggs and weekly grocery baskets.