BNPL Expands as Credit Holds Firm

Earnings season has offered up a snapshot of the sweeping impact buy now, pay later (BNPL) payments are making in commerce, as they are now firmly mainstream, and are gaining omnichannel scale as consumers increasingly use BNPL both online and at physical stores.

Rounding up some of the metrics and comments from earnings releases and conference calls reveals the extent of the trend.

No Longer a Niche: Scale Reflected in Volumes and Merchant Penetration

Klarna saw group gross merchandise volume (GMV) grow 19% year over year to about $31.2 billion in Q2, with particularly strong U.S. momentum where GMV rose 37% YoY. Its network expanded to ~790,000 merchants (up 34% YoY) and served 111 million active users globally (up 31%).

Sezzle delivered total revenue of $98.7 million in Q2, up 76% YoY. And as PYMNTS reported, management emphasized its business scalability. During the call with analysts, CEO Charlie Youakim said, “We are happy, as it means … we must be doing something right as we are upsetting the traditional norm.”

Affirm reported that for fiscal Q4 ended June, revenue rose 33% to $876 million, and GMV jumped 43% YoY to about $10.4 billion. COO Michael Linford noted on the call that the latest period marked the firm’s largest GMV quarter ever.

PayPal’s BNPL business, as part of overall Q2 results, saw transaction margin dollars grow 8% YoY excluding interest on customer balances, driven in part by BNPL volume.

Block/Afterpay reported BNPL GMV within Cash App grew double digits year on year to about $9.11 billion in the quarter; BNPL gross profit rose 18% to about $261 million. The report highlighted Afterpay’s integration and promotion within the Cash App and Square ecosystems. Borrow origination (related small-dollar credit) grew 95% YoY to $18 billion annualized.

Across all these, spend categories gaining traction include retail, travel/ticketing as cited by Affirm, and in Block’s Square segment strength in food and beverage and retail sellers.

Credit Performance Is Still Strong

Klarna’s BNPL delinquency rate (60+ days) improved to 0.89% in Q2 2025 (down from 1.03% in Q2 2024), while credit provisioning increased but actual realized losses fell to 0.45% of GMV. Provision for credit losses rose to $174 million (from $106 million year prior) due to expanding loan volume, but the drop in delinquency underscores responsible usage.

Sezzle said underwriting has scaled with no signs of stress; management called their model fundamentally scalable with efficiency gains.

Affirm said credit quality stabilized; Linford highlighted that growth in zero-interest BNPL plans leaped during the quarter. CEO Max Levchin noted strength in underwriting and the ability to pull back on lending if conditions warranted.

Block’s Afterpay results indicated that there’d been about a 1% loss on Afterpay consumer receivables, and 96% of all installments are being paid on time.

Brick-and-Mortar Transactions Underscore Omnichannel Appeal

Klarna: Strategic partnerships and integrations (with Walmart, Stripe, eBay) are driving in-store and omnichannel BNPL deployment; OnePay Later at Walmart launched across physical stores. The merchant count growth reflects broadening in-store and omnichannel reach to ~790k.

Block/Afterpay: The firm emphasized in-store adoption via Square merchants; Cash App Pay usage doubled YoY, with Tap to Pay enabling in-store acceptance. Management noted on the call that post-purchase BNPL as of July crossed the 1 million active milestone.

Affirm: The company continues expanding into brick-and-mortar through its debit card and merchant integrations. In-store spending on Affirm cards grew 187% year on year. The card 0% APR GMV more than tripled was tied to 14% of Card GMV, according to company materials, as noted in the firm’s most recent earnings results.