Buy Now Pay Later Market size was valued at USD 27,845.10 Million in 2022 and is poised to grow from USD 32,035.79 Million in 2023 to USD 1,22,778.17 Million by 2031, growing at a CAGR of 18.6% in the forecast period (2024-2031).
The global Buy Now Pay Later market has gained significant popularity, mainly during high interest rates and high inflation. BNPL is an attraction to a large consumer base owing to facilities like short repayment terms, advantages of credit, and application-based spending. It has also progressed more than its conventional use to others like groceries, gas, travel, and more.
In the recent years, the Buy Now Pay Later Market has gained huge attraction, especially due to the growth of e-commerce, changing consumer needs, and association between BNPL providers and retailers. Lately, the consumers of BNPL are inclining from Quick Pay towards Buy Now Pay Later ideology due to several benefits. Among many, the top applications of BNPL include Affirm, PerPay, Sizzle, AfterPay, and Klarna, the key features of which are login, in-store, buy, account settings, EMIs (free of interest), auto debits, and reminders. While the present finance application areas majorly emphasize on the payments, especially Buy Not Pay Later services, the wider network plays are still in their beginner phases. The substitute lending technologies will be interested and focusing on data analysis to speed up the loan approvals depending on financial health of clients. Insurance will get fixed in all the retail and luxury purchasing journeys from e-shopping and travel planning to health applications and fitness and health assistants.
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Flexibility and Simplicity of BNPL to be a Key Attraction
With customers searching for substitutes of credit cards to help prevent accumulation of debit, Buy Now Pay Later has progressed as an attraction to end a purchase since it offers flexibility and simplicity of use that combines application-based shopping, short repayment terms, and advantages of credit. As per studies, more than 70% of millennials are expected to buy things from the retailers that employ BNPL service. They are most likely to avoid shopping if any retailer does not have the said service. This simply means that BNPL financial technologies must achieve economies of scale by increasing gross merchandise value to stay ahead in the competition. Also, they must essentially have sufficient cash to cover losses if any. Having said this, strategic alliances and mergers are more expected to happen. The high-value retailers like Klarna and Global-e and Affirm and Amazon, both will force BNPL to add products at check out and increase product distribution by giving access to multiple sellers. On return, such retailers will avail a novel approach to enhance their sales. This practice also signifies that the retailers gaining maximum number of customers will gain advantage over others.
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- NatWest, a United Kingdom-focused banking firm employed BNPL program, wherein customers could pay back their purchases over 4 equal monthly installments without incurring interest. The NatWest mobile app simplified managing these plans. With NatWest’s installment plan, credit cardholders can spread out the payback of certain purchases across three, six, twelve, or twenty-four months.
- Walmart Canada has joined hands with Klarna to give its consumers a simple BNPL option while shopping. The decision was made in response to Canada’s expanding adoption of BNPL, which has resulted in a 51.6% yearly growth in payments within this category. By the end of 2023, it is anticipated that BNPL dealings in the country will total US $2.13 billion, indicating a move toward more adaptable and affordable payment options.
- Scalapay and Marqeta reached an agreement to collaborate with the goal of providing BNPL capabilities throughout Europe. The flexibility of the Marqeta platform improves the Scalapay buying experience. It offers a special “Just-in-Time Funding” function that creates and funds a virtual card instantaneously for the precise loan money once a Scalapay customer completes a purchase and gets approved for a loan. This virtual card can be used right now to make payments using an e-wallet, point-of-sale (POS) system, or checkout both online and in-store. Consumers can finance their shopping from a wider selection of partners due to this functionality.
- In an effort to reduce loan defaults, BNPL major Klarna is reportedly going to start penalizing consumers for any delayed payments in the UK. A portion of the late fines will be used by Klarna to its (CRP) Customer Recovery Programme, which provides customers with financial assistance to settle debt and maintain payment schedules. According to a recent announcement, Klarna is rapidly expanding in the US. It saw a 71% increase in Gross Merchandise Value year over year and a 37% improvement in credit loss rates.
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BNPL is more than just a trend; it is an effective tool that companies can use to improve customer experiences, increase sales, and expand into new market niches. Accepting embedded finance is becoming more and more necessary for individuals who want to stay ahead of the curve as the financial landscape changes.
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