Global Buy Now Pay Later (BNPL) Market 2024–2033

Reports Description

As per the current market research conducted by the CMI Team, the global Buy Now Pay Later Market is expected to record a CAGR of 27% from 2023 to 2032. In 2022, the market size is projected to reach a valuation of USD 6.1 Billion. By 2032, the valuation is anticipated to reach USD 25.7 Billion.

Buy now pay later (BNPL) is a financial service that enables individuals to make upfront purchases of goods and delay payment until a later date. This system encompasses various components and processes, including payment platforms, retail partnerships, application procedures, credit assessments, structured repayment plans, and potential interest charges.

BNPL is commonly employed for a wide range of purchases, spanning consumer electronics, clothing, home furnishings, automobiles, healthcare services, vacations, travel tickets, hotels, and online shopping. This service offers substantial advantages, including enhanced financial flexibility, heightened convenience, reduced financial stress, and the ability for consumers to acquire high-end and luxury items.

The market for buy now pay later (BNPL) services is experiencing significant growth driven by its widespread adoption in various industries. In the e-commerce sector, BNPL services are being extensively used to attract customers, improve conversion rates, and reduce shopping cart abandonment, thereby fueling market expansion.

Moreover, the education industry has embraced BNPL services, enabling individuals to pursue desired courses and degrees without the immediate financial burden of paying full tuition fees upfront, further contributing to market growth. In the automotive industry, the adoption of BNPL services is on the rise, facilitating vehicle purchases by allowing consumers to spread the cost over a predetermined period, which is driving market expansion.

Additionally, consumers’ increasing interest in accessing subscription-based businesses like media streaming platforms, fitness apps, and beauty subscription boxes is bolstering market growth. Several factors are playing a crucial role in driving market growth, including evolving consumer shopping habits, a heightened focus on enhancing user experiences, and the growing number of partnerships between BNPL service providers and industry stakeholders. These dynamics collectively contribute to the overall growth and expansion of the BNPL market.

Buy Now Pay Later Market – Significant Growth Factors

• Consumer Convenience: BNPL services offer consumers the convenience of making immediate purchases while deferring payment to a later date. This flexibility in payment terms appeals to shoppers and encourages them to make more purchases.

• Reduced Cart Abandonment: In e-commerce, BNPL solutions have proven effective in reducing cart abandonment rates. Shoppers are more likely to complete their purchases when presented with the option to pay later, especially for higher-value items.

• Accessibility and Inclusivity: BNPL services often have more lenient credit requirements compared to traditional credit cards, making them accessible to a broader consumer base, including those with limited or no credit history.

• Interest-Free Periods: Many BNPL providers offer interest-free payment periods, attracting consumers who want to avoid accruing interest charges on their purchases.

• Retail Partnerships: BNPL providers establish partnerships with a wide range of retail businesses, both online and offline, expanding their reach and giving consumers more opportunities to utilize BNPL services.

• Education Sector Adoption: The adoption of BNPL services in the education sector allows students to pursue courses and degrees without the immediate burden of paying full tuition fees upfront.

• Automotive Industry Utilization: In the automotive industry, BNPL services are used to facilitate vehicle purchases, enabling consumers to spread out the cost over a predetermined period.

• Subscription-Based Services: Consumers increasingly use BNPL for subscription-based businesses, such as media streaming platforms, fitness apps, and beauty subscription boxes, providing them with easier access to these services.

• Changing Consumer Behavior: Evolving shopping habits, including a preference for online shopping and a desire for flexible payment options, drive the adoption of BNPL services.

• Enhanced User Experience: BNPL providers focus on creating a seamless and user-friendly experience for consumers, including streamlined application processes and easy-to-understand terms.

• Partnerships and Collaborations: BNPL service providers collaborate with various industry stakeholders, including retailers, financial institutions, and fintech companies, to expand their offerings and reach a wider audience.

• Regulatory Support: Regulatory bodies in some regions have provided support and guidelines for BNPL services, which has contributed to their growth and legitimacy.

Buy Now Pay Later Market – Mergers and Acquisitions

• Square’s Acquisition of Afterpay: In August 2021, Square, a financial technology company, announced its acquisition of Afterpay, one of the leading BNPL providers globally. This merger allowed Square to expand its payment and financial services offerings while providing Afterpay access to a broader customer base and enhanced capabilities.

• PayPal’s Acquisition of Paidy: In October 2021, PayPal acquired Paidy, a Japanese BNPL company. This acquisition aimed to strengthen PayPal’s presence in the Japanese market and expand its BNPL services globally.

• Klarna’s Acquisition of Hero: In September 2021, Klarna, a prominent BNPL provider, acquired Hero, a retail tech company. This acquisition aimed to enhance the in-store shopping experience by integrating BNPL solutions with physical retail locations.

• Affirm’s Acquisition of Returnly: In May 2021, Affirm, another major player in the BNPL market, acquired Returnly, a company specializing in return and exchange solutions. This acquisition enabled Affirm to offer a seamless returns experience to its customers.

• Sezzle’s Acquisition of MobiKwik: Sezzle, a BNPL provider with a presence in various markets, acquired MobiKwik, a mobile payments company in India, in 2021. This acquisition allowed Sezzle to expand its reach and services in the Indian market.

• Afterpay’s Acquisition of Pagantis: Afterpay’s acquisition of Pagantis, a European BNPL provider, in 2020 aimed to accelerate Afterpay’s growth in the European market and increase its global footprint.

• Zip Co’s Acquisition of QuadPay: Zip Co, an Australian BNPL company, acquired QuadPay, a U.S.-based BNPL provider, in 2020. This acquisition helped Zip Co expand its presence in the U.S. market.

COMPARATIVE ANALYSIS OF THE RELATED MARKET

Buy Now Pay Later Market – Significant Threats

• Regulatory Scrutiny: Increasing regulatory scrutiny is a significant threat to the BNPL industry. Regulatory bodies in various countries are considering stricter regulations to govern BNPL providers, which could lead to compliance challenges and increased operational costs.

• Consumer Overindebtedness: One of the primary concerns associated with BNPL services is the potential for consumers to accumulate debt beyond their ability to repay. High usage of BNPL options could lead to financial hardship for some consumers, which may result in defaults and increased credit risk for BNPL providers.

• Credit Risk Management: BNPL providers must effectively manage credit risk to avoid losses. The inability to assess and manage credit risk accurately could lead to financial instability and defaults on payments.

• Data Security and Privacy Concerns: The collection and storage of sensitive consumer data for credit assessment purposes raise concerns about data security and privacy. Data breaches and security vulnerabilities could undermine consumer trust in BNPL services.

• Competition: The BNPL market is highly competitive, with numerous providers vying for market share. Increased competition can lead to pricing pressures and the need for continuous innovation to differentiate services.

• Economic Downturns: Economic recessions or downturns can impact consumers’ ability to make repayments, leading to increased defaults and credit losses for BNPL providers.

• Fraud Risk: BNPL providers are susceptible to fraud, including identity theft and fraudulent transactions. Effective fraud prevention measures are essential to mitigate this threat.

• Default Rates: Elevated default rates, particularly during economic downturns, can negatively impact the profitability and stability of BNPL providers.

• Market Saturation: As the BNPL market matures, saturation in certain markets or industries may limit growth opportunities and lead to intensified competition.

• Merchant Integration Challenges: BNPL services require seamless integration with online and offline retailers. Overcoming integration challenges and maintaining strong partnerships with merchants is crucial for market success.

Report Scope

Category-Wise Insights

By Channel:

Online channels have emerged as the dominant force in the Buy Now Pay Later (BNPL) market, primarily fueled by the remarkable growth of the e-commerce industry. These online platforms offer a seamlessly integrated shopping experience, allowing customers to explore a diverse array of products while conveniently accessing BNPL payment options during the checkout process.

The synergy between BNPL services and online retail platforms is further strengthened by the increasing number of partnerships and collaborations, aimed at streamlining the payment process and enhancing user convenience.

Moreover, online channels eliminate the need for manual paperwork or in-person interactions, enabling customers to complete the entire purchase process swiftly. This not only saves time but also significantly enhances the overall shopping experience.

Furthermore, the expansive product offerings across various industries available on online platforms empower customers to leverage BNPL services for financing purchases across a wide range of categories.

In essence, the dominance of online channels in the BNPL market reflects their pivotal role in shaping the future of consumer finance, offering convenience, variety, and accessibility to a vast customer base.

By Enterprise Size:

Established large enterprises enjoy a distinct advantage in the Buy Now Pay Later (BNPL) market, underpinned by their well-established brand reputations and formidable market presence. These factors instill a sense of security and confidence among consumers when utilizing BNPL services.

Furthermore, the substantial financial resources at their disposal empower large enterprises to scale their operations and maintain a competitive edge within the dynamic BNPL market landscape.

Moreover, significant investments made by large enterprises in state-of-the-art payment platforms, advanced data analytics, sophisticated risk assessment tools, and robust customer management systems contribute to the delivery of a seamless and user-friendly experience.

Their commitment to technological innovation enhances user convenience, streamlines processes, and stimulates sales.

Large enterprises further distinguish themselves by facilitating the integration of BNPL services with their existing suite of financial products, including credit cards, insurance offerings, and banking services. This integration not only saves users time but also enhances overall convenience, making BNPL a more appealing payment option.

Additionally, large enterprises are subjected to stringent regulatory frameworks and compliance requirements. This adherence to regulatory standards further solidifies their reputation as trusted providers of BNPL services, assuring consumers of their commitment to transparency, security, and compliance with financial regulations.

Buy Now Pay Later Market – Regional Analysis

North America:

• North America is a significant BNPL market, with the United States leading the way.

• The region benefits from a strong e-commerce ecosystem and consumer familiarity with online shopping.

• Regulatory oversight is increasing, with potential impacts on market dynamics and industry practices.

Europe:

• Europe is a growing BNPL market, with countries like the United Kingdom, Germany, and Sweden showing strong adoption.

• Regulatory changes, such as the EU’s revised Payment Services Directive (PSD2), impact the industry.

• Partnerships between BNPL providers and retailers are driving growth.

Asia-Pacific:

• The Asia-Pacific region, including Australia, India, and Southeast Asian countries, is experiencing rapid BNPL adoption.

• The increasing popularity of online shopping and the youth population are key drivers.

• Local players and global BNPL providers are competing for market share.

Latin America:

• BNPL adoption is on the rise in Latin America, particularly in countries like Brazil and Mexico.

• Economic growth, a growing middle class, and expanding e-commerce contribute to market growth.

• Local regulations and currency fluctuations can influence the industry.

Middle East and Africa:

• The Middle East and Africa are emerging markets for BNPL services.

• The growth of e-commerce and increased consumer access to digital payments are driving adoption.

• Regulatory frameworks are evolving to accommodate BNPL services.

List of the prominent players in the Buy Now Pay Later Market:

• Affirm Inc.
• Afterpay Pty Ltd (Block Inc.)
• Billie GmbH
• Klarna Bank AB
• LatitudePay Australia Pty Ltd
• Laybuy Holdings Limited
• LazyPay Private Limited (PayU)
• Openpay Group
• Payl8r
• Paypal Holdings Inc.
• Splitit Payments Ltd.
• Zip Co Limited
• Others

The Buy Now Pay Later Market is segmented as follows:

By Channel

• Online
• Point of Sale (POS)

By Enterprise Size

• Large Enterprises
• Small and Medium Enterprises

By End Use

• Consumer Electronics
• Fashion and Garment
• Healthcare
• Leisure and Entertainment
• Retail
• Others

Regional Coverage:

North America

• U.S.
• Canada
• Mexico
• Rest of North America

Europe

• Germany
• France
• U.K.
• Russia
• Italy
• Spain
• Netherlands
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• New Zealand
• Australia
• South Korea
• Taiwan
• Rest of Asia Pacific

The Middle East & Africa

• Saudi Arabia
• UAE
• Egypt
• Kuwait
• South Africa
• Rest of the Middle East & Africa

Latin America

• Brazil
• Argentina
• Rest of Latin America