TL;DR
Across the US and Canada, Buy Now Pay Later (BNPL) shattered holiday spending records while consumers carried near-record credit card balances into 2026. With BNPL now incorporated into credit scoring and card-like regulatory protections clarified, the collections and recoveries landscape is set to become more complex. Stacked obligations, tighter compliance expectations, and new decisioning requirements will force organisations to rethink segmentation, analytics, and customer journeys.
What happened over Black Friday and Cyber Week
The 2025 holiday season marked a new high-water mark for BNPL adoption across North America. BNPL online spend surged during Black Friday and Cyber Week, with multiple providers reporting double-digit year-on-year growth and record single-day transaction volumes.
BNPL usage cut across income levels, but Millennials and Gen Z continued to lead adoption as instalment options became a default checkout behaviour rather than a niche payment method.
At the same time, US consumers entered the holiday period carrying record levels of revolving credit card debt. That combination, higher utilisation on cards alongside expanding BNPL usage, materially increases the risk that Q4 balances will be harder to unwind in early 2026. With household budgets already under pressure, analysts expect less discretionary spending headroom and longer cure cycles.
In Canada, BNPL’s share of payment methods nearly doubled during Cyber Week. Rising living costs and the rollout of new no-fee BNPL products helped push instalment payments further into the mainstream at checkout.
Why consumers leaned into BNPL; and why it matters for 2026
Holiday shoppers were more deliberate than in previous years. Many planned ahead, prioritised value, and relied on BNPL to spread payments rather than increase overall spend.
However, the structure of BNPL can mask affordability risk. Smaller instalments may feel manageable in isolation, but when multiple BNPL loans sit alongside revolving credit cards, the true cash-flow burden can be difficult for consumers to track.
This is where stacking risk becomes critical. Regulatory research has shown that a majority of BNPL borrowers take out multiple loans at the same time, with a significant minority using BNPL every month. These overlapping repayment schedules increase the likelihood of payment collisions, missed instalments, and early-stage delinquency; particularly in Q1 and Q2, when holiday obligations fully mature.
For collections teams, this shifts risk earlier in the lifecycle and makes traditional balance-only segmentation increasingly blunt.
Regulatory and credit reporting shifts you cannot ignore
Two structural changes significantly raise the stakes for collections in 2026.
BNPL now influences credit scores (US)
BNPL data is now being incorporated into US credit scoring models. Missed instalments can therefore have a direct and visible impact on consumer credit profiles. This elevates the importance of early intervention, proactive communication, and hardship identification to prevent avoidable credit harm.
Card-like protections for BNPL (US)
Regulatory clarification has confirmed that BNPL digital accounts are subject to key consumer protections typically associated with credit cards. These include dispute investigations, refunds for returned goods, and periodic statements.
Supervisory scrutiny also intensified during the holiday season, signalling higher expectations around transparency, dispute handling, and fair treatment.
In Canada, the direction of travel is similar. BNPL continues to grow while consumer protection bodies maintain close attention on disclosures, data handling, and responsible lending practices. For both lenders and merchants, compliance expectations are only moving in one direction.
What the 2026 collections and recoveries outlook looks like
Timing
Expect a noticeable increase in early-stage arrears from January through spring as pay-in-four schedules complete and promotional credit card rates reset. Portfolio stress is likely to surface first in short-cycle queues and rising roll rates.
Borrower profiles
Younger and more credit-constrained consumers with stacked BNPL obligations will feature more prominently. Vulnerability indicators and frequent simultaneous loan patterns will require segmentation models that focus on cash-flow pressure rather than static balances.
Compliance expectations
In the US, collections operations must support card-style dispute and refund workflows, clear periodic statements, and consistent hardship treatment across BNPL and revolving credit. In Canada, transparency and alignment with evolving consumer protection expectations will be essential.
Four moves collections leaders should make now
1. Detect BNPL stacking early
Enhance data ingestion from payment providers and credit bureaus to identify multiple BNPL loans combined with revolving credit exposure. Add due-date proximity signals to reduce payment collisions and route customers to the most appropriate treatment path.
2. Redesign journeys around cash-flow reality
Offer flexible repayment options, short payment breaks, and re-timed instalments. Align messaging and nudges to BNPL repayment schedules and personalise outreach to prevent avoidable delinquency and credit harm.
3. Build compliance by design
Embed dispute investigation and refund workflows into collections processes. Ensure statements are clear and consistent, and document vulnerability support. In Canada, maintain transparent terms and align with consumer protection guidance.
4. Upgrade analytics and forecasting
Refresh scorecards and impairment models to reflect BNPL behaviour where data is available. Simulate 2026 roll-rate scenarios and align dashboards to early-stage risk indicators and treatment effectiveness.
Partner with Arum to modernise for the 2026 reality
With BNPL now embedded in credit scoring and card-like protections in force, 2026 will reward organisations that modernise quickly. Arum brings cross-market expertise, a growing North American footprint, and hands-on delivery to help collections and recoveries teams redesign segmentation, upgrade decisioning and technology, and embed compliance by design.
We have helped leading brands transform collections strategy, operations, and analytics — delivering measurable improvements in recovery rates, cost-to-serve, and customer experience.
Let’s talk. Arum can complete a BNPL stack-risk diagnostic and deliver a prioritised action plan within weeks.
How we can help
Organisations don’t need to navigate this alone. Many benefit from an independent view of their current collections environment, from call listening and skills analysis to identifying gaps, strengthening processes and supporting training delivery.
With the right expertise behind them, teams can embed these behaviours quickly and confidently, creating lasting change for customers and the organisation.
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About the author
Stephen is Sales Director at Arum Global, leading financial services engagements across the UK and Canada. He brings extensive experience delivering complex solutions to major enterprises, having previously worked with clients such as Citi Bank, Lloyds Banking Group, Centrica, Chevron & Shell amongst other complex enterprise clients. Stephen combines deep industry knowledge with a consultative approach to drive transformation and measurable results.
Stephen Wright
Sales Director