Buy Now Pay Later Market Size, Share, Growth, and Industry Analysis, By Type (Individual and Enterprise), By Application (Fashion and Garment Industry, Consumer Electronics, Cosmetic Industry, Healthcare and Others), Regional Insights and Forecast To 2031

Updated On: 22 April 2024

buy now pay later market REPORT OVERVIEW

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global buy now pay later market size was in USD 4595.7 million 2020 and is expected to reach USD 37370 million by 2027, exhibiting a CAGR of 34.9% during the forecast period. 

The COVID-19 pandemic has been unprecedented and staggering, with experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.

"Buy Now Pay Later" (BNPL) is a financial service that allows consumers to make purchases and defer payment for those purchases to a later date. It has gained popularity as an alternative payment method to traditional credit cards. When using a BNPL service, a customer can buy products or services and delay the payment for a specified period. This period can range from a few weeks to several months. Many BNPL providers offer interest-free financing for a specified time, usually if the full amount is paid by a specific due date. However, some BNPL services may charge a small interest fee if payments are extended beyond this period. BNPL often allows customers to split their purchases into equal or installment payments, making it easier for them to budget and manage their expenses.

While BNPL services started primarily for online shopping, many providers now offer in-store payment options as well.  Some BNPL services don't require a traditional credit check and approval is based on factors like income, spending history, and the purchase amount. Popular BNPL providers include Afterpay, Affirm, Klarna, QuadPay (now known as Zip), and Sezzle. These services have become increasingly popular for online shopping and are often integrated with e-commerce platforms and retail stores.

COVID-19 Impact: Merchant Adoption to Boost Market Growth

With lockdowns and restrictions on physical retail, there was a significant surge in online shopping. Consumers turned to e-commerce for their shopping needs, and buy now pay later services offered an attractive payment option for online shoppers, driving the demand for these services. The economic uncertainty brought about by the pandemic made consumers more cautious about their spending. BNPL services provided a flexible and interest-free or low-interest alternative to traditional credit cards, making it an appealing option for budget-conscious consumers. Many merchants, including small and medium-sized businesses, integrated BNPL solutions into their checkout processes to boost sales. Offering BNPL options became a way to attract customers and increase conversion rates.

LATEST TRENDS

"In-Store Adoption to Enhance Market Growth"

BNPL providers continued to expand their partnerships with e-commerce platforms and online retailers, making it easier for consumers to access BNPL options during the online shopping process. This trend likely continued to grow, with BNPL services integrated into various e-commerce ecosystems. BNPL services started to gain traction in physical retail stores as well, with some providers offering options for in-store purchases. The ability to use BNPL for both online and in-store shopping provides consumers with a consistent payment experience. Many BNPL companies sought to expand their operations internationally. This expansion was particularly evident in the United States, where Australian BNPL giants like Afterpay, Zip, and others aimed to establish a strong presence.

buy now pay later market SEGMENTATION

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• By Type

Based on type market is classified as individual and enterprise.

• By Application

Based on application market is classified as fashion and garment industry, consumer electronics, cosmetic industry, healthcare and others.

DRIVING FACTORS

"Alternative to Credit Cards to Augment Market Growth"

BNPL services offer a more convenient and flexible payment option for consumers. Shoppers can make purchases and spread the cost over multiple instalments, which is often interest-free if paid on time. This flexibility is attractive to those who prefer not to pay the full amount upfront or who want to budget more effectively. The rise of e-commerce, especially during the COVID-19 pandemic, has accelerated the adoption of BNPL. Online shoppers appreciate the simplicity of BNPL services at the checkout, and e-commerce platforms have increasingly integrated these options to boost conversion rates. BNPL provides an alternative to traditional credit cards. Many consumers, particularly younger generations, are looking for alternatives to credit cards with high-interest rates. BNPL services offer transparent terms and often have lower or no interest if payments are made on time.

"Increased Consumer Spending to Propel Market Growth"

BNPL services typically offer quick and straightforward approval processes. Consumers can often be approved in real-time, making the process efficient and user-friendly. Many BNPL providers offer interest-free financing for a set period if the balance is paid on time. This feature can be an attractive alternative to credit cards with ongoing, high-interest rates. Buy now pay later market growth has been shown to increase consumer spending. The convenience of splitting payments into instalments can encourage people to make larger purchases than they might otherwise. Many retailers and merchants have integrated BNPL options into their payment systems. This has not only attracted more customers but also increased sales conversion rates.

RESTRAINING FACTOR

"Risk of Over-Indebtedness to Impede Market Expansion"

Buy now pay later companies are increasingly facing regulatory scrutiny in various countries. Regulators are concerned about consumer protection, responsible lending, transparency, and potential financial risks associated with these services. New regulations may impact the industry's operations and increase compliance costs. The convenience of BNPL can lead to overuse and overspending, potentially causing consumers to accumulate more debt than they can manage. This risk can result in financial difficulties for consumers and raise concerns about predatory lending. The BNPL industry has become highly competitive, with many providers vying for market share. As a result, providers may face challenges related to profitability, customer acquisition, and customer retention.

buy now pay later market REGIONAL INSIGHTS

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"North America to Dominate the Market Due to Large and Tech-Savvy Consumer Base"

The North America has been a major driver of the buy now pay later market share. The country has seen significant adoption due to a large and tech-savvy consumer base, a strong e-commerce ecosystem, and a preference for online shopping. Multiple BNPL providers, including both domestic and international companies, have established a presence in the U.S. market, leading to increased competition and adoption. The regulatory environment, while evolving, has been relatively favourable, with fewer restrictions compared to some other regions. North America has been one of the earliest and most mature BNPL markets. Companies like After pay (now part of Square), Zip Co, and others originated in Australia and have expanded internationally.

KEY INDUSTRY PLAYERS

"Key Players Focus on Partnerships to Gain a Competitive Advantage"

Prominent market players are making collaborative efforts by partnering with other companies to stay ahead of the competition. Many companies are also investing in new product launches to expand their product portfolio. Mergers and acquisitions are also among the key strategies used by players to expand their product portfolios.

List of Market Players Profiled

• Afterpay (Australia)
• QuadPay (Zip Co Limited) (Australia)
• VISA (U.S.)
• Sezzle (U.S.)
• Affirm (U.S.)

REPORT COVERAGE

The report anticipates a detailed analysis of the global market size at the regional and national level, the ssegmentation market growth and market share. The prime objective of the report is to help user understand the market in terms of definition, market potential, influencing trends, and the challenges faced by the market. Aanalysis of sales, the impact of the market players, recent developments, opportunity analysis, strategic market growth analysis, territorial market expansion, and technological innovations are the subject matter explained in the report.