Market Definition
The buy now pays later (BNPL) is a financial option integrated into the online shopping e-commerce platforms that allow customers to easily borrow & break their payments over a relatively short period with low-interest rates in comparison to the credit lines. Therefore, the growing inclination of consumers towards flexible payment alternatives is a key factor supporting the growth of the market globally.
Market Insights
The Global Buy Now Pay Later market is projected to grow at a CAGR of 23.58% during the forecast period, 2022-27. The rising demand for consumer discretionary products such as electronics, furniture products, etc., among millennials & low disposable income has elevated the demand for buy now pay later service during the historical years. The easy availability of credit, in contrast to the credit lines with low or minimum interest & easy repayment options, has stimulated the revenue growth of buy now pay later service providers. Moreover, the increasing steps taken by players such as PayPal Holdings, Klarna, and others in expanding their product portfolio & catering to the emerging need for finance among the young populace by launching solutions with interest-free buy now pay later installments via service providers have greatly supported the market's revenue growth. For instance:
| Report Coverage | Details |
|---|---|
| Study Period | Historical Data: 2017-20 |
| Base Year: 2021 | |
| Forecast Period: 2022-27 | |
| CAGR (2022-2027) | 23.58% |
| Regions Covered | North America: The US, Canada, Mexico |
| South America: Brazil, Argentina, Rest of South America | |
| Europe: Germany, France, Italy, The UK, Russia Spain, Rest of Europe | |
| Asia-Pacific: China, Japan, India, Australia, Rest of Asia Pacific | |
| Middle East & Africa: The UAE, Saudi Arabia, Nigeria, Egypt, Rest of Middle East & Africa | |
| Key Companies Profiled | Klarna, Afterpay, Affirm Inc., Laybuy Group Holdings Limited, PayPal Holding Inc., Kredivo, Zip Co. Ltd., Splitit, Sezzel, Amazon, Flipkart, Scalapay S.R.L., Perpay Inc., Paytm, PayI8r, Others |
| Unit Denominations | USD Million/Billion |
Furthermore, growing initiatives by financial service providers such as American Express, Visa, MasterCard, and others to provide easy access to finance to their customers through the launch of buy now pay later (BNPL) services have boosted revenue growth of buy now pay later service providers in the coming years.
Key Trend in the Market
Businesses in various industries are eagerly integrating the buy now pay later option on their websites in order to capitalize on benefits such as the ability to generate a high volume of sales leads through increased traffic on the e-commerce platform. Therefore, the integration of buy now pays later as an alternative is estimated to offer lucrative opportunities for driving the revenue growth of businesses by offering customers flexible payment options & attracting payback discounts and other offerings, including loyalty programs, etc. Further, realizing the benefits of buy now pay later adoption, several online selling merchants have engaged with the service providers to generate sales leads.
Moreover, the rising business-to-business partnerships to cater to the emerging consumer demand for digitalized payment alternatives keeping in view the merchants’ interest, are anticipated to boost the revenue growth of buy now pay later service providers in the coming years.
Impact of COVID-19 on the Buy Now Pay Later Market
The buy now pays later service providers gained significant traction during 2020 as a result of a surge in the number of online buyers. The increase in the purchase of healthcare products & consumer electronics, among others, from e-commerce websites globally, despite a decrease in disposal income, supported the revenue growth of the buy now pay later market. Moreover, the deterrence of banking & financial institutions to sanction the short-term credits during the crisis made an immense contribution to the revenue growth of buy now pay later service providers instead of the advantages such as easy availability of credit on lower interest rates. Furthermore, e-commerce platforms such as Flipkart & Amazon, among others, rapidly integrated the buy now pay later services during cart checkouts, which attracted millions of customers to opt for the services
Market Segmentation
Based on the Sales Channel:
Among the two, the online sales channel captured a dominating share in the Buy Now Pay Later market during 2017-21. The growing adoption of e-commerce platforms globally to buy a wide range of products, including electronics, groceries, clothing, and accessories, using digitalized banking solutions and services, has made a significant contribution to the demand for buy now pay later services from online sales. Moreover, the rapid expansion & integration of buy now pay later services on e-commerce platforms such as Amazon, Klarna, and Flipkart, among others, provided customers with hassle-free checkouts despite the lower availability of income and also provided lucrative opportunities for the growth of the market. For instance, in 2021, Amazon India reported over 2 million pay later signups on the site 2020. This is expected to churn the demand for buy now pay later services in the forthcoming years as well.
Based on the Application:
Of them all, Consumer Electronics acquired a major market share in the Global Buy Now Pay Later Market during 2017-21. Consumer electronics acquired a considerable share in the Global Buy Now Pay Later market during 2017-2021. It is one of the rapidly evolving and highly innovative industries, with over hundreds of newly launched electronics recorded over a year. Rising urbanization & digitalization, as well as the emerging need for consumers to adopt the latest technologies & services, have all contributed to a rapid increase in consumer electronics demand in recent years.
Furthermore, the higher price of electronics & the buyer's low disposable income have made a significant contribution to the global demand for buy now pay later services, as buy now pay later services enable the buyer to fulfill its requirement of purchasing the gadget while removing the burden of paying large sums in one go.
Based on the End-user Age Group:
The global buy now pay later services gained striking momentum among the age group of 18-34, owing to an increase in the awareness among the millennials & generation Z about the financial advantages such as the reduction in interest rates, long payback period, and ease of credit availability. Notably, this age group has a mix of consumers ranging from students to early-age working professionals who have limited income & higher utility needs, such as smart devices & other consumer electronics, among others.
Moreover, the lower availability of financing solutions & services, including credit cards & credit lines for the age group, has opened up new growth opportunities for the buy now pay later service providers. According to ZestMoney, a BNPL service provider, the buy now pay later services have emerged as a preferential option across the age group of 18 to 34 years, with major investments being made in the up-gradation of Edtech courses, clothing, and electronics.
Regional Landscape
Geographically, the Global Buy Now Pay Later Market expands across:
Geographically, North America has been portraying a noticeable market growth since 2017. The higher presence of Fintech service providers with competitive portfolio offerings has made a notable contribution to driving the demand for buy now pay later services across North America. Further, with the increasing partnerships among the buy now pay later & entertainment service providers across the region, providing consumers with attractive discounts and rewards & loyalties, the demand for buy now pays later services is anticipated to soar in the forthcoming years. For instance:
Recent Development by Leading Companies:
Market Dynamics:
Key Driver: Varied & Ease of Payment to Cater to the Market Growth
The growing propensity of the young age population towards the adoption of digitalized services, owing to the advantages such as attractive product offerings, quick & easy account settlements & transactions, have significantly increased the penetration of buy now pay later service providers across the globe. Moreover, an increase in the launch of gaming & smart devices has contributed to attracting millions of youngsters to opt for buy now pay later services as it enables easy access to electronic wallets for quick payments & easy repayments. These factors are conjointly supporting the revenue growth of buy now pay later service providers globally.
Key Restraint: Higher Interest Rates & Availability of Substitutes to Impede the Market Growth
Despite the growing integration of buy now pay later services in online retail platforms, there is a lack of acceptance among the adults in developing & underdeveloped nations, including South America, Asia-Pacific, and the Middle East & Africa due to high amounts of interest levied on delayed payments. This has discouraged many potential customers to adopt BNPL services. Moreover, the easy availability of substitutes, such as post-dated checks, credit cards, etc., for the individuals with low-interest rates has hindered the growth of buy now pay later service across developing & underdeveloped nations.
Key Questions Answered in the Market Research Report:
Frequently Asked Questions
A. The Global Buy Now Pay Later Market is projected to grow at a CAGR of around 23.58% during 2022-27.
A. Consumer Electronics is anticipated to emerge as an area of remunerative opportunities for the leading players in the Global Buy Now Pay Later Market during 2022-27.
A. The rising integration of BNPL services in e-commerce platformsis expected to create new business horizons for the Global Buy Now Pay Later Market in the coming years.
