The buy now pay later platforms market is estimated to be valued at USD 34.66 Billion in 2024, growing at a CAGR of 22.3% over the forecast period (2024-2031). The adoption of the buy now pay later model is increasing rapidly as it allows consumers to split payment of purchases into installment payments over time without paying any additional interest charges.
Market Dynamics:
The growth of the buy now pay later platforms market is driven by increasing consumer spending and penetration of the e-commerce sector. Changing consumer preferences towards deferred payment methods is positively impacting the adoption of BNPL payment options. Consumers prefer interest-free installment plans over credit cards as it allows them to budget payments for purchases over time. BNPL also helps boost sales conversions for merchants by removing financial barriers at checkout. Further, BNPL providers are partnering with merchants to offer their payment solutions across more sectors such as healthcare, utilities, and insurance, thereby expanding market opportunities. The rising financial inclusion of younger demographic groups is also supporting the uptake of BNPL payment alternatives.
Buy Now Pay Later Platforms Market Drivers:
Growing Acceptance and Adoption of Digital Payments is Driving Growth in the Buy Now Pay Later Platform Market
With the rapid digitization of payments over the past decade, more consumers are comfortable making purchases and payments online. Younger generations in particular have embraced digital-first lifestyles and are early adopters of new fintech services. This widespread acceptance and regular use of digital payment methods like credit and debit cards, mobile wallets, and bank transfers has created a more enabling environment for the emergence of buy now pay later platforms. By offering consumers financing options integrated directly into online and in-store checkouts, BNPL services are appealing to those already comfortable shopping and paying digitally. As digital payments continue gaining ground worldwide, more potential BNPL customers will be open to these convenient interest-free installment plans.
Rising Consumer Demand for Flexible Financing Alternatives is Fueling the Market Growth
The COVID-19 pandemic and resulting economic uncertainties have made budgeting and expense management more challenging for many households. At the same time, stimulus programs and rising savings rates have given some consumers more flexibility in their spending. This has driven strong interest in buy now pay later platforms that offer affordable and transparent financing on both big and small purchases. Compared to credit cards that charge interest, BNPL empowers consumers to pay over time without incurring debt. For discretionary or unplanned expenses, these short-term, zero-interest plans have become an appealing alternative to credit for managing costs of living. As economic conditions remain volatile, the demand for transparent and flexible financing options will sustain the buy now pay later platform market expansion.
Buy Now Pay Later Platforms Market Restraints:
Regulatory Uncertainty Poses a Near-Term Risk to Market Growth
Due to their recent rise in popularity and blurred lines with lending, buy now pay later programs face growing regulatory scrutiny globally. In key regions like the North America, and the Europe, regulators are still determining how and whether to classify these services and apply appropriate oversight. Stricter rules around underwriting standards, late/missed payment penalties, and responsible lending practices could increase compliance costs. On the other hand, less regulation than traditional credit may challenge the long-term viability and trustworthiness of BNPL business models. For now, this ambiguous regulatory environment is a constraint that risks hampering innovation and partnerships for players in a period of market expansion.
Threat of Tighter Credit Standards Could Deter New Customer Segments
While offering an alternative to credit cards, buy now pay later platforms remain reliant on assessing customers’ ability and willingness to repay loans on schedule. During economic downturns when credit tightens, any declines in individuals’ finances could negatively impact approval and default rates. Younger or lower-income consumers new to credit may find it more difficult qualifying for BNPL plans if underwriting hurdles rise significantly. For market leaders targeting broader demographics, losing access to large untapped customer groups would slow long-term growth timelines. Mitigating credit risk poses an ongoing challenge as the industry expands into new geographic and customer segments.
Buy Now Pay Later Platforms Market Opportunities:
Partnerships with Retailers and Merchants Open Up New Distribution Channels
Buy now pay later providers have a big chance to grow by forming stronger partnerships with both online and physical stores. By integrating payment options and financing approvals directly into checkout flows, BNPL services can acquire customers and drive more sales volumes for merchant partners. Large retailers and e-commerce marketplaces in particular present enormous pools of shoppers that BNPL platforms can tap into through co-branded promotions and exclusive offerings. In-person partnerships with big-name retail stores help reach customers who still prefer shopping at physical locations. Optimizing merchant relationships through revenue share models and value-added services can supercharge the acquisition of both merchants and consumers onto BNPL networks.
Open Banking and Financial Data Sharing accelerates Underwriting and Customer Experience
An emerging trend with enormous potential is the rise of Open Banking—which sees financial institutions seamlessly sharing customers’ transaction data with third parties upon consent. By connecting to bank account feeds, buy now pay later providers can instantly verify applicants’ incomes, expenditures, and repayment histories without relying as much on credit bureaus. This allows for rapid, frictionless underwriting that approves the right risk profiles and avoids delays. Better insights also help personalize shopping experiences on partner platforms. As Open Banking standards and Application Programming Interface (APIs) mature globally, BNPL firms that leverage open finance will gain significant competitive advantages in user acquisition, risk management, and analytics to drive ongoing growth.
Link - https://www.coherentmarketinsights.com/market-insight/buy-now-pay-later-platforms-market-4013
Key Development:
In June 2022, Santander, a Spain-based bank, introduced its Buy Now Pay Later (BNPL) app called 'Zinnia' for the European market. The Zinnia app allows consumers to make purchases with interest-free monthly instalment payments across various European countries.
In April 2022, Temenos, a banking software company, introduced an Artificial Intelligence (AI)-powered Buy Now Pay Later (BNPL) banking service within its Temenos Banking Cloud platform. This platform utilizes AI technology to provide consumers and merchants with various alternative credit products.
In February 2022, Affirm Holdings Inc., a provider of BNPL services for consumers, released two major product suites: a Chrome browser extension and the Affirm’s SuperApp. The SuperApp offers advanced BNPL features for payments, shopping, and financial services, all in one user-friendly solution.
In January 2022, Block, Inc., a technology company specializing in financial services, bought Afterpay Limited. is a financial technology company that offers "buy now, pay later" services. This purchase was made to improve Block, Inc.'s financial services and product offerings. It allowed the company to reach more consumers, leading to increased revenue opportunities for sellers and merchants.
Key Players:
Affirm, Inc., Afterpay Pty Ltd, Atome, Flipkart Internet Private Limited, Grab Holdings Inc., Hoolah Holdings Pte Ltd., Klarna Inc., LatitudePay Australia Pty Ltd, Laybuy Group Holdings Limited., Mastercard International Incorporated, Monzo Bank Limited, One97 Communications Limited (Paytm), Openpay Pty Ltd., Payl8r (Social Money Ltd.), PayPal Holdings, Inc., Perpay Inc., Sezzle Inc, SPLITIT USA INC., and Zip Co Limited
