BNPL and Private Credit Build $1.8 Trillion Consumer Lending Chain as Crisis Fears Grow
Updated
Updated · Ynetnews · Jul 6
BNPL and Private Credit Build $1.8 Trillion Consumer Lending Chain as Crisis Fears Grow
2 articles · Updated · Ynetnews · Jul 6
Summary
$1.8 trillion in private credit is increasingly funding BNPL loans, creating a fast-growing consumer lending chain that Wall Street says has not been tested in a major downturn.
Forward-flow agreements drive the model: funds commit in advance to buy newly originated loans, letting fintechs recycle capital immediately and expand lending without waiting for repayment.
Recent deals show the scale—Klarna expanded an Elliott agreement to $2 billion backing up to $17 billion in U.S. lending, while Affirm secured a $3 billion arrangement with PGIM Credit.
The main risk is an originate-to-distribute dynamic reminiscent of pre-2008 finance, though supporters say retained risk, default triggers, discounts and tighter underwriting provide buffers.
BNPL use is spreading into essentials as well as discretionary spending: Adobe said BNPL financed $28.5 billion of U.S. online purchases in the first four months, while regulators are scrutinizing underreported 'phantom debt.'