Marqeta (MQ) found that buy now, pay later spending has increased 33 percent year-over-year this holiday season. Marqeta CEO Simon Khalaf joins Yahoo Finance to discuss where consumers are using buy now, pay later.

"It is ... a holiday season that's fueled by buy now, pay later," Khalaf says. "Definitely, the trend is in retail, which is discretionary spending. But we've also seen it... bleed into travel and entertainment." Marqeta found that buy now, pay later for restaurant and bar spending is up 23 percent year-over-year, discretionary spending is up 21 percent year-over-year, and air travel spending is up 34 percent year-over-year. Buy now, pay later "is clearly contributing to our economy."

"The consumer is benefiting from buy now, pay later versus traditional credit cards," Khalaf explains, as credit card APRs are "anywhere between 22 percent and 29 percent, while in buy now, pay later, it's actually interest free."

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Video Transcript

SEANA SMITH: Well, retail sales are expected to reach new records this holiday season fueled in part by buy now, pay later loans. Americans increasingly turning to the option to stretch their dollars as they juggle higher rates and higher prices. That could spell trouble down the line though, with a report from the Consumer Finance Protection Bureau finding more than 40% of pay late users had actually overdrawn on their bank accounts in the last year.

Our next guest says he's already seen a 33% jump in spending this season. Let's bring in Simon Khalaf, Marqeta CEO to discuss more about where the consumer is using buy now, pay later. Good to talk to you today. Talk to me about what you have seen in terms of spending habits from the consumer in this space.

SIMON KHALAF: Akiko, thanks for having me and having Marqeta. And it's great to be back on Yahoo Finance. I was part of your team before. So it is indeed. I'd say a holiday season that's fueled by buy now, pay later. Indeed, we have seen a 33% increase in buy now, pay later in the week leading into Cyber Monday. And that has not gone down.

So definitely, the trend is in retail, which is discretionary spending. But we've also seen it go into and bleed into travel and entertainment. We've seen BNPL in airlines or airline tickets go up 34% and restaurants and bars go up 23% So definitely some really interesting trends with buy now, pay later. It is clearly contributing to our economy.

SEANA SMITH: Simon in that data that you just shared, are you finding that the consumer is using buy now, pay later instead of their tapping into their credit cards or using it in addition to credit cards?