Our Take
Banks admit BNPL creates credit risk but lack concrete data on actual losses, making these survey responses more fear than evidence.
Why it matters
Credit unions show highest concern levels at 40%, signaling potential market consolidation as smaller institutions may avoid BNPL adoption due to compliance complexity and partner liability risks.
Do this week
Risk teams: audit current BNPL partnerships for compliance gaps this month so you can address partner liability issues before regulatory guidance tightens.
Most banks acknowledge BNPL credit risks
American Banker's 2026 BNPL Tradeoff Survey polled 186 banking professionals across banks, credit unions, neobanks and payments firms in March 2026. The results show 86% of respondents at banks offering BNPL said the products create some degree of credit risk, while only 9% said BNPL poses no risk at all (per American Banker survey).
On revenue impact, institutions split by size and type. Among national banks, 16% agreed BNPL threatens credit card revenue while 19% disagreed and 53% remained neutral (company-reported). Regional banks showed 33% agreement versus 45% disagreement. Community banks split evenly at 25% each way with 46% neutral.
Credit unions displayed the highest concern levels, with 40% viewing BNPL as a credible threat to credit card revenue, compared to 25% who disagreed and 32% neutral (survey data).
Partner liability drives compliance headaches
Partner liability and oversight emerged as the top compliance challenge, affecting 56% of banks offering BNPL at moderate to significant levels (survey results). Regulatory ambiguity and underwriting standards each hit 52% of respondents.
The Office of the Comptroller of the Currency issued guidance in 2023 noting that "existing credit scoring systems are not designed to capture the very short-term nature and structure of BNPL loans." This creates blind spots in traditional underwriting models that institutions are still working to address.
Institutions with scale have moved in-house to avoid third-party risks. Citigroup's Pay Installment Lending program, launched in 2023, now includes 195 U.S. merchants (company-reported). "We have a lot of data on our customers and do a lot of analysis that can provide insights to merchants," said Kartik Mani, head of Citi Retail Services.
Risk models and monitoring dominate responses
Banks offering BNPL are implementing stricter monitoring protocols and risk models (39% of respondents), followed by strict credit controls (23%) and limits with guardrails (21%). Only 13% are attempting to offset risks with revenue (survey data).
The regulatory environment remains fluid. Fed Governor Michael Barr warned that inadequate oversight could create debt traps similar to payday loans, particularly when consumers don't understand repayment terms or fee structures.
Municipal Credit Union in New York City represents the emerging approach, with Chief Lending Officer Mike Savino telling American Banker they're incorporating BNPL payment data into underwriting models. "We as an organization aren't shying away from any data point that we feel will allow us to get our members to a financially well off place."