Originally appeared in
Buy now, pay later on a pizza shows the hunger of lenders
Published in The Sunday Times on July 12 2026.
I’ve written previously in this column about the dramatic increase in the use of consumer credit since the 1950’s however credit has been around for much longer than you may think. The wording on a Babylonian tablet from around 1800 BC translates loosely to “Two shekels of silver have been borrowed by Mas-Schamach, the son of Adadrimeni, from the Sun priestess Amat-Schamach, the daughter of Warad-Enlil. He will pay the Sun God’s interest. At the time of harvest he will pay back the sum and the interest upon it.” This is probably one of the earliest known credit agreements.
Early credit would have been largely informal and based on trust. At some point it changed to become more formalised with written agreements. It developed further during the 19th century with the emergence of hire purchase. In recent times advances in technology have changed the nature of it again, making the financing of the smallest of purchases possible at the click of a mouse.
Many people will have noticed and indeed may use the instalment payment option known as Buy Now Pay Later (BNPL) which is now more prominent on the websites of some retailers than the credit card payment option. A deliberate nudge no doubt.
During my time as a lender many moons ago I recall a colleague referring to our industry as the “rarefied world of credit”. Not so rarefied any more, as credit provision has expanded exponentially as technology removed the friction of both assessment and distribution.
Lenders like to match term to purpose so while your insurance premium is likely to be financed over 12 months, your car loan may have a five year term and your mortgage thirty years or more. All very sensible.
I was surprised and a bit horrified recently to hear that BNPL can be used by consumers in some countries to purchase their Friday night pizza. Financing a pizza with an economic life of about fifteen minutes using an instalment plan just doesn’t seem sensible, but it’s probably not presenting much systemic risk to the financial system either.
From a retailer’s point of view, offering BNPL drives higher average order values. 43% of respondents to a 2023 survey by the Central Bank of Ireland said that they “often spend significantly more money than planned when they use BNPL”.
Unlike say mortgage lending, BNPL terms are short. This means that the paydown rate is very high, which means that measuring usage is more like measuring the water in a fast-flowing river rather than water in a lake. The measure used by providers which is gross merchandise value (GMV) overstates usage as initial instalments reduce this, as do returns.
According to Deloitte, global volume last year was probably in the region of $560bn and it is forecast to grow to over $900bn by 2030. It’s likely however that some of this is merely displacing other payment mechanisms such as credit card payments.
Irish consumers will probably mainly encounter Klarna and Humm, and Revolut used Ireland for the launch of their ‘Pay Later’ product in 2022. Unlike BNPL providers where the merchant signs up and pays, where a fintech provides Pay Later it is the consumer who signs up and pays the fees. Arguably more transparent than retailer led BNPL.
The danger comes from the fact that while BNPL is a form of credit, many people don’t recognise it as such, because it just doesn’t feel like taking out a loan. A study of a sample of BNPL applications in the US by the Consumer Financial Protection Bureau revealed that users of BNPL tend to have disproportionately higher amounts of personal debt, and 61% of applicants had subprime credit scores.
Curiously, despite the size of the market none of our pillar banks has entered the fray. Is this due to a desire to stick to more prudent lending or a strategic mistake – we shall see? It has a place in the credit ecosystem but offering it for certain types of purchase like the aforementioned pizza, feels for me anyway, just a little bit predatory.
As an underwriter said to me many years ago when signing off on a marginal credit, “sure if it doesn’t work out he can pay it back in easy instalments”. Call me old fashioned but I would say that it’s better to pay for that pizza with cash.
Eoghan Gavigan is a certified financial planner and the owner of Highfield Financial Planning hfp.ie
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