News Summary

Nigel Morris, co-founder of Capital One and an early investor in buy-now-pay-later (BNPL) companies like Klarna, has expressed significant concerns about the rapid expansion of BNPL services. At the Web Summit in Lisbon, Morris highlighted that a substantial number of users are now utilizing BNPL for essential purchases such as groceries, indicating financial strain among consumers. The use of BNPL services in the U.S. has surged to 91.5 million users, with a default rate of 42% in 2025, reflecting an upward trend from previous years. The lack of reporting to credit bureaus has led to ‘phantom debt,’ obscuring the true financial burden on consumers. The Consumer Financial Protection Bureau (CFPB) has had a fluctuating stance on BNPL regulation, with recent reports showing mixed results about the impact of these services on consumer debt stress. Morris warns of potential systemic risks, drawing parallels to the 2008 financial crisis, while emphasizing the need for vigilance among regulators as BNPL services continue to integrate into traditional financial systems.