Private credit firms are providing billions of dollars in capital to buy-now-pay-later (BNPL) companies to accelerate the sector's rapid growth [1].

This shift in funding marks a critical transition for the fintech industry as non-bank lenders fill a void left by traditional financial institutions. By bypassing conventional banking channels, BNPL firms can scale their lending operations more aggressively to meet rising consumer demand.

Major investment firms including KKR, Blackstone, and Apollo are among the non-bank lenders driving this trend [1]. The activity is centered primarily in the U.S., though growth is now increasing across Europe and Asia [1], [2].

The surge in funding is driven by a convergence of market pressures. Consumers are increasingly seeking flexible financing options while traditional banks have pulled back from these types of risk exposures [1], [2]. Simultaneously, private-credit investors are chasing higher yields within a low-interest-rate environment [1], [2].

Financial data highlights the scale of this expansion. Global BNPL transaction volume reached roughly $120 billion in 2026, representing an increase of about 30% year-over-year [1]. To support this volume, private-credit funding directed toward BNPL firms grew to approximately $10 billion in 2026 [1].

The trend has intensified over the past two years, as highlighted in a Bloomberg report earlier this month [1]. These private credit arrangements allow BNPL providers to maintain liquidity without the stringent regulatory requirements often imposed on traditional deposit-taking banks.

As these firms continue to integrate into the global retail experience, the reliance on private capital creates a new interdependence between the shadow banking sector and consumer retail habits [1], [2].

“Private-credit funding to BNPL firms grew to about $10 billion in 2026”

The migration of BNPL funding from traditional banks to private credit firms shifts the systemic risk of consumer debt into the 'shadow banking' sector. While this provides the liquidity necessary for fintechs to expand globally, it reduces the oversight typically associated with regulated banking institutions, potentially creating a volatility loop if consumer defaults rise across the U.S. and Asian markets.