Afterpay's out. What's next for 'buy now, pay later' in NM?

Alaina Mencinger, Albuquerque Journal, N.M.
Updated ·3 min read

Jan. 14—Despite the growing popularity of "buy now, pay later" services, there are fewer options now for New Mexico consumers to pay off their purchases over time. At the beginning of the year, BNPL service Afterpay decided to leave the state, joining other providers that avoid New Mexico due to state regulations.

But the new state regulation that prompted Afterpay's departure does not prohibit BNPL providers — it merely regulates them and other loan providers, setting a 36% interest cap, and limiting late fees. Fees on late payments within 10 days are limited to 5 cents on the dollar of the total installment price. Although Afterpay does not charge interest on its installments, it does enforce late fees.

However, despite Afterpay's departure, several BNPL providers are still available in the Land of Enchantment.

"The state is still open for business," said Gerron Levi, senior vice president and head of governmental affairs at the American Fintech Council. "And BNPL providers will be there."

Levi said New Mexico is one of many states that are implementing regulations on the loan industry, which includes BNPL services.

"New Mexico is not alone in wanting to heighten regulatory standards," Levi said, pointing out similar rate caps in Illinois, Maine and Hawaii.

BNPL providers let consumers make purchases — and, for some providers, even pay bills — in installments. Levi said that BNPL, when regulated, can be a useful tool for consumers.

"This is a very good option for consumers," Levi said.

And although New Mexico's regulations have prompted some BNPL services to pull out of the state, some have adapted to accommodate local consumer protection and licensing regulations. For example, per Afterpay's terms of service, late fees do not apply to Rhode Island residents.

Here's a list of some BNPL services that are — and aren't — available in New Mexico:

Still available

Affirm: Like Afterpay and Klarna, Affirm, which reported 14 million users nationwide at the end of 2022, breaks purchases into installments. However, an Affirm spokesperson said that, unlike the other two BNPL providers, Affirm has no late fees.

Splitit: Splitit varies from some other BNPL providers because it uses existing consumer credit to offer installments. The company looks to see that users have sufficient credit to make a purchase, then uses that credit to spread the payment out over time. Consumers are approved automatically if they have available credit on an existing credit card.

Uplift: Uplift is focused specifically on travel bookings. The BNPL service partners with cruise lines, airlines, resorts and other travel industries. Uplift offers different monthly payment plans that vary in length.

Not available

Paypal Pay in 4: Since its inception in 2020, Paypal Pay in 4 has not been available in New Mexico due to state regulations. Like Affirm, Pay in 4 has no late fees.

Klarna: With 32 million users in the U.S., Klarna, founded in 2005, is one of the largest worldwide BNPL services. Klarna is not available in New Mexico due to state regulations. Spokespeople for Klarna were unable to specify when the company left the state, or if it had ever done business in New Mexico.

Afterpay: Afterpay decided to leave the state Jan. 1 after an amendment to the New Mexico Small Loan Act and New Mexico Bank Installment Act took effect in the new year.

Deferit: Deferit, which allows users to pay their bills in four installments, rather than make purchases, is not available in New Mexico. A Deferit spokesperson said legal advice prompted the decision.

Editor's Note: A previous version of this article incorrectly cited the number of U.S. Klarna users. It has since been updated.