Buy Now, Pay Later — and the Global Debt Trap Our Generation Walked Into

Photo by Random Institute on Unsplash

There is a particular feeling that financial technology has gotten very good at selling. You are standing at a checkout, online or in a shop, and you want something you cannot quite afford this week. A screen offers you a way out. Split it into four payments. Pay nothing today. The thing is yours now, and the cost arrives later, in pieces small enough to ignore. For a moment the gap between what you have and what you want simply disappears.

That feeling is the product. Not the loan, not the item. The feeling that the gap is gone.

It is the same feeling whether the screen says Klarna or Afterpay at an American checkout, or whether it is a menu on a basic phone in Kigali offering you a loan in under a minute. The technology is different. The currencies are different. The marketing is dressed up in different languages. But underneath, the offer is identical, and so is the trap waiting on the other side of it. Our generation, more than any before it, has been handed this offer everywhere it turns. And the data is starting to show what happens when an entire generation takes it.

What is actually happening, by the numbers

Buy Now, Pay Later — BNPL — is the polished Western face of this. At checkout, instead of paying the full price, you split the purchase into installments, usually four, often advertised as interest-free. Klarna, Afterpay, Affirm, and a handful of others built enormous businesses on this simple idea.

The scale is no longer small. According to the Federal Reserve Bank of Richmond, the total value of BNPL loans reached an estimated seventy billion dollars in 2025, growing at roughly twenty percent a year since 2021. That is still only a sliver of total credit card spending, which is partly why regulators have not panicked. But the growth curve is steep, and the people riding it are disproportionately young.

Here is the part the advertising leaves out, and these figures come from the United States, where the data is most complete. Research cited by industry analysts found that somewhere between thirty-four and forty-one percent of BNPL users there have made at least one late payment. More than sixty percent of American BNPL borrowers fall into subprime or near-subprime credit categories — meaning the people using it most are often the people least able to absorb a missed payment. And the debt hides easily. Around sixty-three percent of users have more than one BNPL loan running at the same time, and a third use several different providers at once. This is called loan stacking, and it makes a person's true debt almost impossible to see, even for the lender, even for the borrower.

The interest, when it appears, is not gentle. Deferred financing rates on some BNPL products run as high as thirty-six percent. And the consequences are getting heavier: as of 2025, BNPL activity has started to appear on credit reports, which means a missed installment on a pair of shoes can now quietly damage your ability to one day borrow for a home.

The reason young people reach for it is not mystery or stupidity. It is arithmetic. Gen Z and Millennials carry an average of thirty-eight thousand dollars in student debt each. In major cities, housing eats close to half of disposable income. When the gap between your income and your basic costs becomes permanent, a tool that papers over that gap every month stops feeling like a luxury and starts feeling like survival. That is exactly how it is designed to feel.

The same trap, a different name

Now leave the American checkout and come to where I am writing from.

In Rwanda, you do not need a credit card to fall into this. You need a phone. MTN's mobile money platform, MoMo, has more than five million subscribers here, and through it you can open a service called MoKash, offered by NCBA bank, in the time it takes to dial a short code. No bank account. No paperwork. No forms to sign. You dial the code, accept the terms you will not read, and you can borrow money against your own future, repayable in thirty days at nine percent interest. A newer product, MoFlex, lets you borrow anywhere from a thousand francs to over a million, with rates from seven to fourteen percent, due in seven, fourteen, or thirty days.

On paper, these rates look reasonable. Nine percent for a month does not sound predatory. But the structure is the trap, not the headline number, and to see the structure clearly you only have to look one country over.

Kenya is the place mobile lending was born, and it is the place the consequences have run the furthest. The numbers there are not gentle at all. Default rates on digital loans climbed to as high as forty percent in 2024. Some Kenyan digital lenders have charged up to seventeen percent for a thirty-day loan, which works out to an annual rate above two hundred percent. A 2021 national survey found that more than half of people borrowing through mobile banking loans had defaulted — a default rate far higher than for bank loans, microfinance, or savings cooperatives.

And the collection practices are where it stops being about numbers. Across Kenya, borrowers have reported lenders calling their employers, contacting their family and friends, publicly shaming them, and sending threatening messages to people who fall behind. One widely reported story followed a woman who borrowed three thousand shillings to restock her small shop, then borrowed from a second app to repay the first, then a third, until she was drowning — dodging calls, juggling overdue reminders, trapped in a spiral that began with a single tap. The Office of the Data Protection Commissioner in Kenya received over four thousand complaints about digital lenders misusing customer data. Regulators in Kenya and Nigeria have spent 2025 and 2026 scrambling to rein the industry in, with fines and licensing crackdowns, precisely because the harm got too large to ignore.

Rwanda is not Kenya. Our market is younger and more contained. But the mechanism sitting inside MoKash and MoFlex is the same mechanism that produced the Kenyan crisis, and the same mechanism dressed in nicer clothes that produced the BNPL numbers in America. Easy access. Short repayment windows. Penalties for falling behind. A product that earns more the more you struggle.

Why it hits our generation hardest

There is a whole genre of meme now where a young person announces they are terrible with money, and the spending that supposedly proves it turns out to be a loaf of bread. It is a joke, but it is pointing at something real. When buying basic food feels like a financial event, that is not a discipline problem. That is a gap — between what our generation earns and what life now costs — and an industry that has learned exactly how to profit from it.

I spent months working as a customer service representative at a call center. I am not at liberty to share what individual people told me, but I can tell you the shape of it, because it was the same shape almost every day. You call someone, you lay out the case, you explain why life insurance matters, and they understand completely. They agree. And then: rent is due in two days. A family member is sick. There is a car being towed in their driveway while we are on the phone. Some of them told me they were doing fine, rolling in money — and I would think, then why is your number in the pool I am dialing? The ones who insisted they were fine were often the ones hiding it hardest.

Yes, some of this is poor saving. Some of it is weak discipline, and some of it is plain impulse. I am not going to pretend otherwise. But none of that excuses the system built around that weakness. A bag of cement that used to cost nine thousand francs now costs sixteen. The ground keeps shifting under people, and an entire industry has set up shop on the unstable part.

I am not knocking MoKash completely. Sometimes a quick loan saves you from real shame, from losing face, or it carries you through a genuine emergency. That is real, and it matters. But other times the same product buries you. People can be bad at saving, and these lenders will spot that weakness and go straight for it. They are fellow capitalists trying to make their money, nothing personal, no hard feelings — all while your life quietly comes apart. The lack of malice does not make it any less dangerous.

How the trap actually closes

Let me show you the mechanism step by step, because understanding it is the only real defense.

It starts with a genuine need. You are short. Say you have seventy thousand francs and you need a hundred to cover something that cannot wait — rent, school fees, a medical bill, stock for a business. The thirty thousand gap is real and the deadline is real. So you borrow it. The money lands in your wallet in minutes. The relief is immediate and total.

Then the thirty days begin counting down, and life does not pause to let you repay. Another expense arrives. The repayment date approaches and you do not have it, or you have it but spending it leaves you short again. So you do the thing the system quietly encourages: you let it ride, or you take a top-up, or you borrow from somewhere else to cover it. Each move feels small. Each move buys a little time. And each move deepens the hole.

When you finally do have money in your wallet — say your last ten thousand francs after a hard month — the deduction can happen automatically, because the loan is tied to the same mobile wallet your money flows through. The system does not ask whether you can spare it. It takes what it is owed when it sees it. And if a balance remains, the threat that follows is the one that actually controls people: your credit will be marked, your name will be flagged, your ability to borrow in the future — for a home, a business, an emergency — will be damaged.

That threat works because it is often true. And it reveals the real nature of the product. A tool sold as a bridge across a one-time gap quietly becomes a permanent tax on every shilling or franc that passes through your hands.

What to actually do about it

I cannot tell you never to borrow. Life is unpredictable, and sometimes the tap on the phone is the only door open to you on a given day. So the goal is not abstinence. The goal is borrowing without getting trapped.

That sounds optimistic, because these lenders will not give you an inch. So you have to take the inch yourself, and it starts with one boring habit almost nobody practices: read the terms first. Know exactly what you are agreeing to, exactly when and how they take their money back. Most people skip this entirely. And on the rare occasion you read closely, you might even find an angle in your favor.

Here is what borrowing well can look like. Picture someone buying a HOWO truck on a bank loan, then putting it to work — construction companies rent it, and over a few months or years the truck earns back its own price plus the interest. That is a loan that generates income while it repays itself. Most of us do not have access to that kind of money, so think smaller. The principle still holds: before you borrow, ask what this money will actually do for you in the long term, and then commit to that fully. Go in completely or do not begin at all. Half-measures with borrowed money are how people drown.

A few hard rules. Never stack loans — if you already owe on one, do not use a second to pay the first. Fix the original problem and move on. Treat the money with respect; it is not cash to flaunt, because every franc of it chains you a little tighter to a system designed to build wealth out of your mistakes. And leave emotion out of it. Separate genuine need from impulse. If the impulse is too strong to trust, do the thing that actually protects you: cut yourself off from the ability to borrow entirely. Then, when you reach for the loan and find you have already blocked it, you are forced to stop and think of another way. Sometimes the smartest financial move is making the dumb decision impossible.

The promise these tools make is real in the moment and false over time. The gap they close reopens wider. That does not make them evil, and it does not make you a fool for using them — sometimes the tap on the phone is the only option you have on a given day. But knowing how the trap closes is the difference between using the tool and being used by it. The companies understand the mechanism completely. The least you can do is understand it too.

This is part of an ongoing series on building financial stability in a hard market. If you missed it, the first piece looked at how AI is removing the gatekeepers in homebuying — the other side of the same story, where technology works in your favor instead of against it.