The global Buy Now Pay Later (BNPL) market reached $120 billion in 2021. The market recorded a CAGR of more than 85% from 2019 to 2021. Millennials and Generation Z are the main demographics driving the adoption of BNPL. Buy now pay later (BNPL) providers disrupt the lending sector by simplifying access to loans to consumers and reducing friction at payment points. The sector has been around for many years, but it has seen rapid growth recently as key players expanded into new regions. Long dominated by key BNPL providers such as Klarna, Clearpay, and Affirm, the sector is now being challenged by incumbent card networks and banks such as Visa, Mastercard, and Barclays.

The sector has been able to grow so rapidly partly due to a lack of regulation. However, governing bodies are reviewing the sector and considering imposing rules to protect consumers from accumulating unmanageable debt. This will likely have an impact on BNPL providers’ revenues – which will prove problematic given that many of the industry’s major players are already reporting significant losses.

BNPL Theme: Key Trends

The key trends that will impact the BNPL market in the coming months can be divided into three categories: technology trends, macroeconomic trends, and regulatory trends.

Technology trends

The main technology trends that will impact the BNPL market are online payments, mobile payments/mobile commerce, social media, super apps, and machine learning.

Macroeconomic trends

The main macroeconomic trends that will impact the BNPL market are millennials and generation Z, BNPL providers collaborating with card scheme networks, low-income consumers, credit cards, inflation, consumers’ online shopping expectations, open banking, acquisitions, COVID-19 impact, and Russia-Ukraine conflict.

Regulatory trends

The main regulatory trends that will impact the BNPL market are BNPL regulation, failure to properly disclose terms and conditions, strong customer authentication (SCA), and the BNPL credit approval process.

Buy Now Pay Later: Industry Analysis

The BNPL sector has been rapidly growing in the past few years after becoming an important trend in the payments industry during the pandemic. As consumers around the world were forced to spend more time indoors, their spending habits shifted from in-store to online. Due to pandemic-led financial insecurity, some consumers adopted BNPL solutions as this enabled them to stretch their finances while limiting their exposure to interest rates. Amid the recovery from COVID-19, BNPL providers are looking to capitalize on the momentum they built during the pandemic.

Despite all the attention it is gaining, BNPL is still a small sector compared to other payment options and it is not yet globally available. Its adoption is being driven by the ecommerce sector, as merchants are adopting it to expand the payment options they can provide to consumers

BNPL – Value Chain Analysis

The value chains in the BNPL market can be divided into segments: lending, open banking, security provider, and credit bureaus.

Lending

BNPL providers become the intermediaries between consumers and merchants as they facilitate the purchase for consumers by spreading the cost over multiple installments, but also take on all the risk by paying merchants upfront.

Open Banking

BNPL providers use open banking as an alternative to traditional credit checks. It can provide them with insights into a consumer’s financial data across multiple institutions and can help determine their creditworthiness. In addition, BNPL providers take advantage of open banking to automatically debit payments from their customers by directly connecting to their bank accounts.

Security Provider

Security payment providers oversee transactions and protect participants from potential issues when making an online transaction. They are responsible for providing solutions that verify and authenticate consumer and merchant information. They are also effective at detecting and preventing potential fraud.

Credit Bureaus

Credit bureaus are critical to the credit scoring ecosystem as lenders rely on them to assess consumers’ creditworthiness before approving a loan. But current credit bureau scoring models are only suited for traditional lenders such as credit cards, while not reporting BNPL loans creates a blind spot in the sector that prevents lenders from having a fair assessment of the risk they are taking on when approving a client.

Major Companies Associated with the BNPL Theme

Some of the major companies that are making their mark within the BNPL theme are Addi, Affirm, American Express, Amount, Ant Group, Apple, Barclays, Behalf, Biller, Billie, Bread, Bumper, Citi, Curve, and Goldman Sachs.

For more insights on the BNPL market, download a free report sample

BNPL Market Report Overview

Market size (2021) $120 billion
CAGR (2019–2021) >85%
Key trends Technology Trends, Macroeconomic Trends, and Regulatory Trends
Value chains Lending, Open Banking, Security Provider, and Credit Bureaus
Major companies Addi, Affirm, American Express, Amount, Ant Group, Apple, Barclays, Behalf, Biller, Billie, Bread, Bumper, Citi, Curve, and Goldman Sachs

Scope

This report discusses the disruptive potential of the BNPL sector on the payments industry. It identifies the leading companies that are driving growth in the space as well as the benefits BNPL provides to both merchants and consumers. The report also discusses the risks around BNPL loans and the future regulatory outlook.

Reasons to Buy

  • Understand key technology, macroeconomic, and regulatory trends driving BNPL.
  • Find out how BNPL challenges the payment card market.
  • Find out how incumbent financial institutions are responding to BNPL.
  • Identify the key players in the sector.

Key Players

Affirm
Amazon
American Express
Amount
Ant Group
Apple
Barclays
Block
Citibank
CreditLadder
Experian
Equifax
Goldman Sachs
Klarna
JPMorgan Chase
Mastercard
Monzo
NovaCredit
PayPal
Paytm
Revolut
Santander
Sezzle
TransUnion
Zilch
Zip

Table of Contents

Executive Summary

Players

Trends

Technology trends

Macroeconomic trends

Regulatory trends

Industry Analysis

Regulation

Mergers and Acquisitions

Timeline

Value Chain

Companies

Sector Scorecards

Payments sector scorecard

Ecommerce sector scorecard

Glossary

Secondary Sources

Further Reading

| Our Thematic Research Methodology

| About GlobalData

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Frequently Asked Questions

The BNPL market size was valued at $120 billion in 2021.

The BNPL market recorded a CAGR of more than 85% from 2019 to 2021.

The key trends that will impact the BNPL market can be divided into three categories: technology trends, macroeconomic trends, and regulatory trends.

The different value chains in the BNPL market are lending, open banking, security provider, and credit bureaus.

Some of the major companies that are making their mark within the BNPL theme are Addi, Affirm, American Express, Amount, Ant Group, Apple, Barclays, Behalf, Biller, Billie, Bread, Bumper, Citi, Curve, and Goldman Sachs.

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