Many students take out their first loan before they have opened their first credit card. Buy now, pay later made that possible. Online and at the register, there is often a prompt asking how you want to pay: in full, later, or over time. Choose the last option and a $41 burrito bowl becomes four payments of close to $10. So how does an industry built on interest-free loans make billions of dollars?

In the Wall Street Journal video, How ‘Buy Now, Pay Later’ Makes Billions From ‘Free’ Loans, executives from Klarna, Afterpay, and Affirm explain how the pay-in-four model actually generates revenue, with merchants paying as much as 5% of a transaction and one provider reporting that more than 90% of its income comes from retailers rather than customers.

Click these links to access the video, student guide, and answer key

Wall Street Journal Video | NGPF Student Viewing Guide + Answer Key

Video Length: 8:25

Discussion Questions

Use these to spark conversation after students watch:

1. BNPL lets you pay for a $41 burrito bowl in four installments. Do you think using BNPL for everyday purchases like food or groceries is a smart financial decision? Why or why not?
2. The video notes that two-thirds of BNPL loans go to borrowers with lower credit scores. Is that a sign that BNPL is helping underserved consumers access credit, or is it a warning sign about financial risk?

This video pairs well with NGPF’s Types of Credit unit.

This resource was created through NGPF’s partnership with Dow Jones, bringing high quality financial journalism into personal finance classrooms across the country for free.

Every WSJ Wednesday, NGPF will highlight a classroom-ready article, video, or data crunch resource from the Wall Street Journal, MarketWatch, or Barron’s, including a student guide, discussion questions, and an answer key.

About the Author

Yonathan Tadesse

Yonathan is a Dallas-based Curriculum Designer at NGPF with 12 years of experience as a high school math, college transition, and financial literacy teacher. An award-winning educator, he has a track record of launching innovative programs at the high school level that expand access and opportunity for students. He is a graduate of Emory University and is passionate about advancing financial education for all students. Outside of work, Yonathan loves spending time with his wife and two kids, working out, playing chess and poker, and learning new things.

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