Monthly Highlights and Lowlights for May 2025
In the ever-evolving world of finance, two significant developments are making headlines: the increasing adoption of Buy Now, Pay Later (BNPL) services among young people, particularly Gen Z, and the European Payments Initiative (EPI) launching its e-commerce solution.
The convenience of BNPL services has made them a popular choice among younger generations, but recent statistics show that this trend comes with impacts and risks. As more BNPL use is reflected in credit scores, on-time payments can improve scores, yet the unsecured nature of BNPL can lead to negative credit impacts if multiple lines are used or payments are late, especially for those who lack traditional credit history.
Moreover, the convenience of BNPL can encourage higher spending and financial overextension, with 41% of users paying late, according to LendingTree. This trend is particularly concerning for Gen Z, who tend to be financially vulnerable and show higher financial constraints when they pay late with BNPL.
The reasons for high BNPL adoption among young people are twofold. Their tech-savvy nature and openness to new payment technologies make them more likely to adopt BNPL. Additionally, rising living costs put pressure on them, leading to BNPL use as an alternative to credit cards, which they use less frequently to avoid harming their credit scores.
Regulators and researchers are closely monitoring the long-term consequences of these trends. The growing BNPL trend offers convenience but poses risks of financial strain and credit damage, with late payments and unsecured borrowing being key concerns.
Meanwhile, the European Payments Initiative (EPI) is gaining momentum. In a strategic shift, EPI has partnered with Revolut, a prominent neobank in Europe, signalling a break with the old dominance of traditional banks and an opportunity to reach younger target groups.
The EPI e-commerce solution, Wero, is set to launch in September 2025. The partnership with Revolut is expected to strengthen EPI's position in the market and position it as a key player in widespread use.
However, the road to widespread adoption is not without challenges. In Germany, for instance, one in three Germans have missed a BNPL payment deadline, according to a recent Schufa survey. This highlights the need for responsible use and education about the financial implications of BNPL.
The internal change within EPI has been accelerated by external pressures such as new tariff announcements from Donald Trump and the ongoing debate about European independence in payment systems. Despite past differences and resentments, EPI is ready to look past these for the sake of a greater European goal.
Lukas Homrich, a freelance journalist who writes about economic and financial topics, notes that BNPL usage is not limited to the U.S. and is becoming more prevalent in Germany. He also points out that BNPL purchases are loans, which can be costly, and encourages consumers to use these services responsibly.
In summary, the rise of BNPL services and the European Payments Initiative (EPI) are shaping the future of finance. While BNPL offers convenience, it also poses risks that need to be carefully managed. The EPI, with its strategic partnerships and innovative solutions, is well-positioned to play a key role in this evolving landscape.
Personal-finance implications of Buy Now, Pay Later (BNPL) services are becoming increasingly important, as on-time payments can positively impact credit scores, whereas late payments or multiple lines used simultaneously can negatively impact credit for those with less traditional credit history. In the business world, the European Payments Initiative (EPI) is partnering with Revolut to gain traction among younger generations, signaling a shift from traditional banks and posing as a potential key player in the e-commerce sector with the upcoming launch of their solution, Wero, in September 2025.
