The holiday season is almost over, but for many gift-givers, the tab won’t come due until well into 2021.

Millions of U.S. consumers, looking to stretch their dollars and avoid taking on new credit-card debt during the coronavirus pandemic, flocked in recent months to “buy now, pay later” offers from financial-technology companies including Affirm Holdings Inc.,

Afterpay Ltd.

APT 0.31%

and Klarna Bank AB.

In November, the cumulative number of U.S. shoppers that had opened an Afterpay account exceeded 13 million, and 7.5 million of them had made a purchase using Afterpay in the previous 12 months. Also in November, purchase volume among Afterpay’s U.S. users reached more than 1 billion Australian dollars, equivalent to more than $770 million and roughly triple the level a year earlier. (Afterpay is based in Australia and reports its figures in the local currency.) Klarna had counted 11 million total U.S. users as of October, two million of which used the Klarna app in the preceding month. The number of annually active Affirm users reached 3.9 million as of Sept. 30, up 63% from a year earlier.

“You think of the Zooms of the world, for example, the delivery services of the world—some businesses were really lucky to do well during Covid, and I think we were one of those really fortunate businesses,” said

David Sykes,

the head of Klarna’s U.S. unit.

Investors are taking notice. The price of shares in Afterpay, which trade in Australia and the U.S., has quadrupled since the start of 2020. Affirm filed paperwork last month with the Securities and Exchange Commission for an initial public offering that could value the San Francisco startup at as much as $10 billion, The Wall Street Journal previously reported. Klarna recently became one of Europe’s most valuable privately held tech companies after a fundraising round pegged the worth of the Swedish company at $10.65 billion.

“Buy now, pay later” applies to a variety of payment plans, but among the most common is an option to split the cost of a small to midsize online purchase into four equal installments over the course of a few weeks or months, interest-free.

Shoppers are attracted to fixed payment schedules and simplified checkout processes, according to consumer surveys. Some providers, such as Affirm, structure these offers as zero-interest loans, which involve credit checks. Others, including Afterpay, consider their services not to be loans but instead regard them as sales contracts to which some state and federal consumer-credit rules don’t apply.

Purchases made on buy-now-pay-later plans are accelerating as banks’ credit-card balances have fallen and their credit-card spending volumes are just starting to rebound to pre-pandemic levels. Consumers’ reluctance to take on new revolving debt during economic uncertainty, and the move by banks to toughen approval standards, are among the reasons for the decline in card volumes, bank executives have said.

In the absence of interest income, buy-now-pay-later companies make the bulk of their revenue from fees they charge to merchants, though some also charge consumers fees for late payments. Merchant fees can range from 2.5% to 4% of the purchase price, according to analysts at Bank of America, and can sometimes be higher.

At Affirm, which finances products including

Peloton Interactive Inc.’s

stationary bikes, merchant-network revenue in the three months ended Sept. 30 was $93.3 million, or about 6% of Affirm’s $1.48 billion in gross merchandise volume during that period.

For merchants, such costs are often worth it because Affirm, Afterpay and Klarna can encourage younger, debt-averse consumers to complete a sale and increase the amounts they are willing to spend. The companies also help drive online sales after the pandemic caused foot traffic at physical outposts to drop.

Macy’s Inc.,

Foot Locker Inc.

and thousands of other merchants have added these payment options in recent months.

“Now, if you don’t have a solution like ours, you’re almost at a competitive disadvantage,” said Klarna’s Mr. Sykes.

Foot Locker introduced Klarna as a payment option on its North American websites in October. It quickly became one of the top three ways shoppers were paying for their sporting-good purchases, with more than 2,000 orders a day, Foot Locker Chief Executive

Richard Johnson

said on a conference call in November.

Klarna has driven a 25% increase in the average order value for customers of the fashion retailer

Express Inc.

who use that option to pay since it was made available in September, Express Chief Executive

Timothy Baxter

said on an earnings conference call in December.

“It’s just another way to offer customers, particularly in the economic situation that we’re in right now, flexibility,” Mr. Baxter told investors shortly after the Klarna partnership went live.

The newfound popularity of buy-now-pay-later offers is leading regulators to pay closer attention to the offerings.

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In March, California’s Department of Business Oversight announced it had reached a roughly $1 million settlement with Afterpay to resolve findings that the company structured its product to “evade otherwise applicable consumer protections” and was making loans to California residents without a valid license. An Afterpay spokeswoman said the company was pleased to have the “clarity and pathway for business certainty in the market.”

Just before Christmas, the U.K.’s advertising regulator faulted Klarna for commissioning social-media posts by influencers that appeared to encourage consumers to use the service on purchases of beauty and skin-care products to improve their moods.

Klarna said in a blog post that those ads had been an attempt to recognize the mood of its users during the U.K.’s first lockdown. “We acknowledge that, whilst we had the best of intentions, we missed the mark,” the company said.

The coronavirus pandemic has forced many Americans to accept new financial realities. WSJ’s Shelby Holliday traveled to a diverse neighborhood in Philadelphia to learn how neighbors are facing different struggles brought on by the same virus. Photo: Adam Falk/The Wall Street Journal

Write to Peter Rudegeair at Peter.Rudegeair@wsj.com

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