Buy now, pay later: why more young people are facing financial difficulties

A new way of consuming

Shopping habits have changed dramatically over the past decade.

One-click purchases, subscription services and Buy Now, Pay Later (BNPL) solutions have made spending faster and more convenient than ever before. For many consumers, especially younger generations, spreading payments over several months has become a normal part of everyday life.

However, these new payment habits also bring new challenges.

As Hélène Lange, Head of Business Coordination at the ABBL, explained in an interview with Virgule, instalment payments have become deeply embedded in modern consumption patterns. Individually, these commitments may seem manageable, but when combined with subscriptions, housing costs or other loans, they can gradually place pressure on household finances.

Small payments can quickly add up

The issue is rarely one single purchase.

Instead, financial pressure often results from the accumulation of several seemingly modest commitments spread across different providers and platforms.

Online shopping, one-click payments, subscription models and social media can all encourage more spontaneous spending, making it easier to underestimate the total amount committed each month.

Understanding these commitments is becoming increasingly important as payment options continue to diversify.

Stronger consumer protection is on the way

To reflect these new forms of consumer credit, the revised European Consumer Credit Directive (CCD2) will strengthen consumer protection across the European Union.

As explained by Jonathan Hug, Head of Legal, Tax and Compliance at the ABBL, Luxembourg is currently preparing the transposition of the Directive into national law.

The new framework will extend consumer protection to payment solutions that previously fell outside the traditional scope of consumer credit rules. It will also introduce stronger information requirements, helping consumers better understand the financial commitments they undertake.

Banks have a role to play

While many Buy Now, Pay Later solutions are offered by merchants or specialised non-bank providers, banks remain an important part of the safety net.

Repeated overdrafts or signs of financial stress often allow banks to identify customers who may be experiencing difficulties.

Under the forthcoming rules, banks will have additional obligations to provide information and discuss possible solutions with customers whose accounts show persistent overdrafts, helping to address financial difficulties before they become more serious.