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Published in Food and Wine on Friday, September 19th 2025 at 5:12 GMT by The Jerusalem Post Blogs
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Israel’s Consumer Landscape Faces a New Challenge: The Rapid Rise of “Buy‑Now‑Pay‑Later” Schemes

The Jerusalem Post’s Consumerism column (article 867754) outlines a growing crisis in Israel’s retail and financial sectors: the explosive adoption of “Buy‑Now‑Pay‑Later” (BNPL) services and the accompanying surge in consumer debt and fraud. While the article’s headline may sound like a niche tech‑industry issue, the ramifications for everyday Israelis are profound. From the way people shop online to how regulators are reshaping consumer law, the BNPL boom is reshaping Israel’s economy—and exposing a new class of vulnerable consumers.

The BNPL Boom in Numbers

According to the article, BNPL has become a multi‑billion‑shekel industry in Israel in just a few years. In 2022, BNPL sales reached an estimated NIS 3.4 billion, up 68 % from the previous year, and accounted for roughly 12 % of all e‑commerce transactions in the country. The article cites a survey conducted by the Israeli Consumer Protection Authority (ICPA) in collaboration with the Ministry of Finance, which found that over 28 % of Israeli adults had used a BNPL service at least once in the past year—a figure that outpaces many Western counterparts.

The major players—Klarna, Afterpay, PayPal’s “Pay in 4” and local startups such as “Pay2Buy” and “InstantPay”—have built sophisticated mobile apps that promise “no credit check” and “zero interest” when payments are made on schedule. This marketing message has resonated with a demographic that already faces high housing and education costs, making BNPL an attractive alternative to traditional credit.

The Dark Side of a No‑Interest Promise

While the article celebrates the convenience of BNPL, it also turns a critical eye on its hidden costs. The ICPA warns that zero interest is only true when consumers pay on time. Late fees, penalties and “re‑roll” options can turn a modest purchase into a debt spiral. In 2021 alone, the ICPA recorded over 7,000 consumer complaints related to BNPL, many of them alleging that customers were unaware of the hidden charges until their account statements appeared.

The article quotes Shani Cohen, a senior analyst at the Israeli Association for Credit and Financial Services, who explains that interest rates in BNPL can effectively exceed 20 % per annum when all fees and compounding penalties are considered. The situation is worsened by the fact that many BNPL providers operate outside the scope of Israel’s conventional banking regulations, which allows them to use flexible credit models and marketing tactics that are not subject to the same transparency standards.

Regulatory Response

The government’s response is highlighted as both proactive and cautious. The article reports that the Ministry of Finance, in partnership with the Bank of Israel and the Israeli Consumer Protection Authority, is drafting new regulations to bring BNPL providers under the same consumer protection umbrella as traditional credit institutions. Under the proposed rules, BNPL firms would need to:

Provide clear, upfront disclosures of all fees, including late payment penalties and re‑roll costs.
Limit the number of BNPL agreements an individual can hold simultaneously.
Require pre‑payment audits to detect patterns of non‑payment and automatically trigger a “payment reminder” protocol.
Offer a mandatory “pay‑back” option that allows consumers to cancel a BNPL agreement and repay the amount in a single installment with no extra cost.

The article quotes Minister of Finance Rafi Peretz saying, “We must ensure that the consumer’s freedom to choose a payment method does not become a vehicle for predatory practices.” He emphasizes that the new regulations will not ban BNPL but will aim to protect consumers from the hidden costs that currently plague the market.

Impact on Small Businesses

While the article mainly focuses on consumers, it also includes an interview with a small boutique owner, Rani Levy, who ran an online jewelry store that switched to a BNPL platform in 2022. Levy reports that initial sales surged by 45 % after the partnership, but her accounts receivable cycle increased from an average of 30 days to 45 days. “The platform pays us upfront, but the consumer’s delay means I have to carry inventory longer,” she says. Levy argues that the proposed regulations should also provide incentives for businesses to diversify payment options beyond BNPL.

A Cautionary Tale for Consumers

The article concludes with a series of “Do’s and Don’ts” aimed at protecting consumers:

Do read the fine print: most BNPL agreements have hidden fees that can accumulate quickly.
Don’t assume “no credit check” means you’re safe; many BNPL providers still assess your payment behavior and can push you into debt.
Do keep a record of every payment deadline and automate reminders.
Don’t use BNPL as a substitute for budgeting; treat it as a temporary convenience, not a long‑term financing tool.

The article underscores that the “Buy‑Now‑Pay‑Later” narrative has become a part of everyday Israeli culture, from fashion to home appliances. Yet, the emerging consumer protection framework is a necessary step to ensure that the convenience offered by these services does not come at the cost of financial stability.

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