Buy Now Pay Later Market: Buy Now Pay Later is the future of Lending

The Buy Now Pay Later Market size was valued at USD 173.09 Bn. in 2022 and the total revenue is expected to grow by 36.17% from 2023 to 2029, reaching nearly 1502.77 Bn.

Retailers are increasingly offering "buy now, pay later" solutions that allow customers to purchase basic essentials by choosing a responsible financing plan and making payments gradually rather than all at once. "Buy Now, Pay Later" enables a customer to break up a retail purchase into a number of smaller, interest-free payments and make them over time. The widespread usage of the buy now pay later payment platform by business owners to finance expensive machinery, purchase raw materials, and pay employee wages. The buy now pay later payment method is also being used by more young people since it has a number of advantages over other payment options, including the opportunity to pay for pricey things like computers and cellphones as well as school supplies and cafeteria expenses.

Credit mechanisms have long been used by consumers to make purchases of goods and services. In recent years, a credit card substitute that's also emerging quickly throughout many industrialised economies, including the US, UK, China, and India has appeared. All consumer groups are using BNPL more consistently. For instance, in the US, BNPL consumption has more than tripled since 2019.To know about the Research Methodology :- Request Free Sample Report
Report Scope:
As per numerous technological categories, current and future applications, and geographical markets, the report segments the market for Buy Now Pay Later. Forecasts for sales and analysis of market trends are also included. The key market-covering region including North America, South America, APAC, Europe, and Middle East and Africa are all carefully categorised in the geographical research. The divisions and sub-segments of the study include the drivers, restraints, opportunities, current market trends, and anticipated technologies needed to transform the Buy Now Pay Later Marke. The report also includes Porter's Five Force analysis, PESTLE analysis, a market investment analysis, and a qualitative market analysis. The report provides the competitive landscape of the key organisations, which includes all essential growth methods.
Buy Now Pay Later Market Dynamics:
Buy Now, Pay Later is Transforming Online Shopping

Buy Now, Pay Later (BNPL) is a point-of-sale financing option that has gained popularity recently, especially with younger demographics. Late payments and declining credit limits were just two of the financial stress-related problems that the COVID-19 pandemic made worse. Due in part to this, the overall use of credit cards across the globe has decreased over the past few years, creating a space for other payment methods to appear. BNPL solutions were created to give customers the option to acquire their products and pay in a predefined number of installments over time as an alternative to credit cards and other types of financing. These options are frequently provided to clients at low or no interest rates and with no additional costs, thus there is no expense to the client.

Customers wishing to make purchases can choose from quick approval times, 0% interest choices, and a predetermined payment schedule with BNPL services. Globally, consumers use BNPL services to avoid paying credit card interest, make impulsive purchases, and borrow money without a credit check. BNPL emerged as the favorite option for customers across all age categories in 2021, according to a survey by ZestMoney, with the youngest consumer being 18 years old and the oldest being 66. According to the poll, men from tier 1 and 2 cities spent a lot on lifestyle and fashion, while women from these same cities invested in ed-tech improvements for devices and upskilling.BNPL as a lifestyle solution

In the wake of the pandemic, a substantial change in payment methods and e-commerce financing called Buy Now Pay Later (BNPL) has gained a lot of popularity. In the past 24 months, there has been growth in e-commerce despite limitations and lockdowns. According to the MMR recent figures, retail spending on BNPL increased by 4x in the US alone, from $24 billion in 2020 to $100 billion in 2021. The global e-commerce business is worth trillions of dollars and has phenomenal potential for YoY growth.

For the adoption of BNPL, banks are restructuring their product strategy. BNPL is significant not just as a product but also because it acts as a link between both current and upcoming generations. Banks are also taking precautiothe ns to create a sustainable business strategy. By adopting BNPL, they embrace change. These are the best methods to increase providing banks with BNPL with differentiated value gives them an advantage.



Share Of BNPL Installment Payments, by Payment Method, 2019-2021


Payment Method 
2019
2020
2021


Debit card
86.8%
88.5%
89%


Credit Card
12.5%
11%
10.1%


ACH
0.3%
0.2%
0.6%


Prepaid Card
0.3%
0.3%
0.3%


Check
<0.1%
<0.1%
<0.1%



Growing Trend of Online Payment Method Among the People

The market for buy now pay later payments is growing more quickly as consumers in developing countries increasingly use online payment methods. The three most popular digital payment methods are mobile payments, debit cards, and credit cards. These methods have many advantages for users, including lower transaction costs. simplifying fund transfer processes and boosting payment security support the buy now, pay later market's growth. High-speed internet accessibility, a boom in smartphone use, and increased public awareness of digital payment services are some of the key drivers behind the widespread adoption of online payment technologies.

Increased smartphone use and quicker connectivity have made it possible for merchants and customers to accept and make payments through digital platforms, which is also fueling the growth of the purchase now pay later market. The market is also expected to rise as a result of an increase in digital payment transactions among developing countries like China, Japan, and India due to the adoption of purchase now pay later technologies and online payment methods by small and medium-sized businesses. as an example. According to MMR, in 2021, the rate of digital payment transactions in India during the months of January, February, and March increased by 76% when compared to the same period in 2020. As a result, the market is growing faster as more individuals start using online payment methods.

Ecommerce growth during the COVID-19 Pandemic

The ecommerce market's growth was driven by the coronavirus pandemic, which in turn raised consumer demand for simple online financing solutions. The growth of ecommerce expanded the reach of these suppliers because BNPL items are designed specifically for online buying. The pandemic left millions of consumers unemployed and financially unstable, and in need of increased flexibility with their purchases. Contrarily, a lot of people managed to pay off debt during the financial crisis, making interest-free BNPL products a desirable option to running up yet another large credit card amount.

Insights into Buy Now Pay Later Market

Buy Now Pay Later is a highly talked-about (and contentious) subject in the financial services industry. It is expected that the emergence of laws and regulations that safeguard this payment type's consumers everywhere over the coming few years. Australia, Sweden, the UK, the US, and other nations have taken moves to regulate the financial industry. Banks like Barclays and Capital One have also acted. Because BNPL does not offer credit reporting, many consumers find it appealing. But now that BNPL abuse by consumers has come to light, credit bureaus are introducing BNPL capabilities to improve underwriting judgments and advance financial inclusion.

For banks and lenders to decide if they wish to engage in the BNPL market, there are many ways to market. Offering cash, credit knowledge, and license to BNPL enterprises is one approach. Another option is to add BNPL offerings to preexisting credit cards. This may seem like the most effective method to enter the BNPL market, but it may also be the most challenging. For instance, 36% of US online adults already have a preferred BNPL provider, and some banks are establishing separate BNPL services, although taking this approach could be difficult. In addition, while larger BNPL companies have been acquiring smaller competitors to help their global expansion, banks and other financial services organisations undoubtedly have a chance to partner with or make a purchase as well.

Regulation: Buy Now Pay Later Market

Fintechs and a few technology companies currently control the majority of the BNPL on a global scale. Micro-finance organizations as well as other new, small, and developing Fintechs are entering this market. Since BNPL providers typically do not charge interest, the BNPL market is mostly unregulated. As a result, the credit authorities in the majority of countries do not compel them to follow the code of behavior. This puts customers in serious danger. Customers frequently run the risk of receiving credit that is beyond their means. The majority of clients are unclear on the risk of BNPLs. As a result, extending credit to customers that are susceptible carries more risk.

As a growing number of smaller players join the game, regulators in each country may enact stricter controls. This implies that there might soon be a procedure for approving the onboarding of new merchants to BNPL systems. Another option is that getting regulatory agency clearance would be necessary before launching a BNPL product. For the SMB loan category, stricter approvals may be in store. In the UK, it has been suggested that the Financial Conduct Authority (FCA) oversee the BNPL sector. In order to entice more high-quality customers over time, banks are expected to implement responsible lending practices. They ought to think about viable long-term tactics for fostering consumer comfort and confidence.
Buy Now Pay Later Market Segment Analysis:
By Channel, the Buy Now Pay Later Market is segmented into Online and POS. In 2022 the Online segment accounted for around 67.2% of total revenue. As part of their post-pandemic revival strategies, numerous companies all around the world are forming partnerships to concentrate on the adoption of the fastest-growing online payment options, like buy now pay later. For instance, Uplift, Inc., a provider of BNPL solutions, declared its relationship with Tripster, a one-stop website for booking travel, in August 2022.

Over the forecast period, a considerable growth rate is expected for the PoS channel segment. To improve customer satisfaction and solidify their relationships with clients, several firms are concentrating on offering PoSBNPL financing solutions. Additionally, companies provide customers with clear PoS installment lending schemes that are loyalty-driven. As a result, companies are seeing higher percentages of recurring customers.

By Enterprise Size, the Buy Now Pay Later Market is segmented into Large Enterprises and Small & Medium Enterprises. The Large Enterprises segment dominated the market share accounting for 61.37% in 2022. Large Enterprises frequently use the purchase now pay later option because it gives customers a flexible and affordable payment option for expensive things. Due to the ease of shopping, customers are able to acquire more goods, which boosts sales. On the other hand, it is expected that the segment of small and medium-sized businesses would grow at the fastest rate through the forecast period. To increase sales conversion rates, small and medium-sized businesses all over the world are concentrating on buy now pay later options. Buy now pay later also offers more clarity because all of its costs and prices are made available to the public. Small and medium-sized businesses prioritise growing their clientele and strengthening their competitive position.

By End-User, the Buy Now Pay Later Market is segmented into Consumer Electronics, Fashion & Garment, Healthcare, Leisure & Entertainment, Retail, and Others. The Fashion & Garment segment dominated the market share accounting for 39.46% in 2022. The industry is seeing a surge in the use of BNPL solutions since they make it simple for clients to spread out the expense of a purchase over a period of time with fixed, interest-free payments. For instance, BNPL solution provider Affirm, Inc. announced in October 2021 that it had partnered with customer clothing site Theory to provide clients interest-free payments on accessories and sportswear. Such elements are encouraging for the segment's growth.

Over the forecast period, the consumer electronics segment is expected to grow at strong CAGR. BNPL payment mechanisms are becoming more widely used in the market as a low-friction alternative to credit cards. Customers also choose BNPL payment methods over credit cards because they avoid costly compound interest and hidden costs. Over the forecast period, it is expected that increased consumer electronic provider awareness of the flexible BNPL payment mechanism would fuel demand for these services.
Buy Now Pay Later Market Regional Insights:
North America region held the largest market share accounting for 34.51% in 2022and it is expected to dominate the market through the forecast period. The region’s growth is attributed to the existence of numerous notable firms. Several fintech businesses in the region are collaborating with entertainment businesses to provide BNPL services for booking hotels. For instance, in September 2021, American theme park and entertainment corporation SeaWorld Parks & Entertainment, Inc., teamed with Uplift, Inc., a developer of BNPL solutions.The Asia Pacific region is expected to exhibit remarkable growth in the Buy Now Pay Later Market with a strong CAGR through the forecast period. In the Asia-Pacific area, the idea of "buy now, pay later" is relatively new. According to MMR, the buy now, pay later option is very common among millennials. In addition, the region's growing internet usage is opening up growth opportunities for buy now pay later.

Thanks to the emergence of e-commerce and digital payments as well as the quick growth of Fintechs, buy now pay later (BNPL) is a developing loan tech sector in India. In addition, GenZ consumers, young millennials, and first-time credit borrowers, who are typically overlooked or underserved by traditional banks, choose BNPL since it is so easy to acquire credit. An MMR expected that the $3–3.5 billion BNPL market in India would increase to $60-65 billion by 2029. The research firm estimates that by then, up from the current 18-23 million, there may be 80-100 million BNPL users in the nation.

Europe is also expected to grow at a significant growth rate through the forecast period. Several large firms, including those in France, Germany, the United Kingdom, and other European nations, are also increasing the range of services they provide there. For instance, in January 2022, PayPal debuted its Pay in 30 Days buy-now, pay-later option in Germany. Users of the service are free to spend up to $1,115 in total over the course of 30 days.
Competitive Landscape
Key Players are heavily investing in R&D to enhance the technical capabilities of buy now pay later systems. Industry participants have tried a number of strategic efforts, such as offering a variety of product lines, joint ventures, mergers, acquisitions, and collaborations. These strategies aid businesses and other market participants in expanding their position in the worldwide buy now pay later industry.For instance, PayPal Holdings Inc. announced in June 2022 that it is expanding its line of credit products to include a new business credit card to assist small business owners with their ongoing financial demands. The first business credit card that PayPal provides is the PayPal Business Cashback Mastercard. It utilises the Mastercard network and is issued by WebBank. The card offers customers 2% cash back on all transactions and has no annual fee. It is one of the best cashback rewards available because there are no restrictions on how much cash back you can receive or when it expires.

A large number of companies are concentrating on creating and releasing a BNPL installment solution that allows customers to pay over time with no interest. These product introductions are intended to give consumers a better overall shopping experience. For instance, PayPal Holdings, Inc. announced the availability of Pay in 4, a no-interest buy now, pay later installment option, in August 2020. With the help of this solution, partners and merchants can receive payment up front, while customers can spread out payments for goods ranging from $30 to $600 over a six-week period. The business increased the scope of its product offering with this launch.
Buy Now Pay Later Market Scope: Inquire before buying



Buy Now Pay Later Market


Report Coverage
Details


Base Year:
2022
Forecast Period:
2023-2029


Historical Data:
2018 to 2022
Market Size in 2022:
US $ 173.09 Bn.


Forecast Period 2023 to 2029 CAGR:
36.17%
Market Size in 2029:
US $ 1502.77 Bn.


 Segments Covered:
by Channel
• Online
• POS


by Enterprise Size
• Large Enterprises
• Small & Medium Enterprises


by End-User
• Consumer Electronics
• Fashion & Garment
• Healthcare
• Leisure & Entertainment
• Retail
• Others



Buy Now Pay Later Market, by Region
• North America (United States, Canada and Mexico)
• Europe (UK, France, Germany, Italy, Spain, Sweden, Austria, Turkey, Russia and Rest of Europe)
• Asia Pacific (China, India, Japan, South Korea, Australia, ASEAN and Rest of APAC)
• Middle East and Africa (South Africa, GCC, Egypt, Nigeria and Rest of ME&A)
• South America (Brazil, Argentina, Columbia and Rest of South America)
Buy Now Pay Later Market Key Players are:
•  Affirm, Inc.(US)
• ViaBill(US)
• Visa(US)
• Quadpay, Inc.(US)
• Splitit(US)
• Mastercard(US)
• Sezzle(US)
• Perpay Inc.(US)
• Amazon(US)
• QuadPay(US)
• Revo(US)
• Apple Pay(US)
• PayPal(US)
• Klarna Inc.(Sweden)
• Openpay(Australia)
• LatitudePay(Australia)
• Afterpay(Australia)
• Atome(Singapore)
• hoolah(Singapore)
• Cashalo(Philippines)
• Paidy(Japan)
• PayBright(Canada)
• Carbon Zero(Canada)
• Clearbanc(Canada)
• Pine Labs(India)
• Twisto(France)
• Tymit(UK)
• Divido(UK)
• Google Pay(UK)
• Zilch(UK)

FAQs:

1. What is the current size of buy now pay later market??
Ans. The global buy now pay later market size was valued at US$ 173.09 billion in 2022 and is expected to surpass around US$ 1502.77 billion by 2029.

2. Which are the most popular buy now pay later app?
Ans.
Best Overall: Affirm
Best for Flexible Payment Plans: Sezzle
Best for Students: Afterpay
Best for No Credit Check: Splitit
Best for Bad Credit: Perpay
Best for Small Purchases: PayPal Pay in 4
Best for Large Purchases: Klarna

3. Which brands provide buy now, pay later?
Ans. Klarna and Afterpay are the two biggest BNPL businesses with millions of consumers each. Both businesses handle millions of transactions while collaborating with tens of thousands of shops.

4. How do BNPL companies make profit?
Ans. BNPL in particular makes money with transaction fees.

5. What are BNPL startups?
Ans. The BNPL business gives internet buyers quick credit, giving them more flexibility to better manage their costs. By lowering payment obstacles and raising success rates, it is intended to assist retailers in providing a seamless client checkout experience.