Buy Now Pay Later Report: Market trends in the ecommerce financing, consumer credit, and BNPL industry

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Buy now, pay later (BNPL) solutions, which allow consumers to pay in interest-free installments, are continuing to grow in popularity as people seek alternative methods of financing—a trend exacerbated by the coronavirus pandemic. And with the swelling market comes heightened competition amongst financial services companies.

Insider Intelligence

Below, Insider Intelligence breaks down how some of these companies stack up, and what business models they are adopting to find success within the shifting market. 

Ecommerce Financing Growth During COVID

The coronavirus pandemic accelerated ecommerce market growth, which in turn increased the demand for easy online financing options. Because BNPL products are native to online shopping, the surge in ecommerce boosted these providers’ reach. 

eMarketer

The pandemic left millions of consumers unemployed and financially insecure, and in need of greater flexibility with their purchases. On the other hand, many consumers actually paid off debt during the crisis, making interest-free BNPL solutions an attractive alternative to racking up another high credit card balance. 

Buy Now Pay Later Market

The BNPL industry has modernized layaway and installment payments to offer consumers flexible payment options for their purchases. Compared to credit cards, intended to be used repeatedly, BNPL solutions are applied to individual transactions—appealing to consumers who want to make less of a financial commitment, even on lower ticket items.

The pandemic’s impact and BNPL’s overall rise in popularity will lead the industry to rack up $680 billion in transaction volume worldwide in 2025. That forecasts a compound annual growth rate (CAGR) of 13.23% from the $285 billion the industry was estimated to record in 2018.

While some BNPL solutions are available in-store, they are native to ecommerce checkout, making them more widely available when shopping online. And with ecommerce sales climbing an estimated 44.4% year-over-year (YoY) in Q2 2020, more consumers may choose to use BNPL solutions more regularly, if they haven’t already. 

Types of BNPL

As companies vie for a share of this booming market, they are eyeing a number of approaches to adopting BNPL products and solutions. 

Direct Providers

Direct providers are at the center of BNPL solutions’ rise in the US and are best positioned to benefit from the industry’s development. They offer BNPL products at the point-of-sale (POS) and are the companies most responsible for the industry’s rising profile.

Affirm

Company examples include:

• Affirm
• Afterpay
• Klarna

Facilitators

Facilitators are major payments companies with established merchant relationships that are looking to capitalize on rising interest in direct providers’ solutions. They enable their merchant networks to offer direct providers’ BNPL solutions to become part of the BNPL ecosystem. 

Company examples include:

• Mastercard
• Shopify
• Stripe

Retroactive providers

American Express

Retroactive providers offer financing options consumers can use for all purchases made on their credit card after the fact. These financing providers, largely issuers, offer flexible payment options after purchases have been made.

Company examples include:

• American Express
• Chase

BNPL Companies & Providers

Both fintechs and large financial institutions are competing for market share, here are some of the top buy now pay later companies:

• Affirm
• Afterpay
• Alliance Data
• American Express
• Chase
• Citi
• Mastercard
• JPMorgan Chase
• Klarna
• PayPal
• Quadpay
• Sezzle
• Shopify
• Splitit
• Stripe
• TSYS
• Visa
• Zip

Buy Now Pay Later Industry Analysis

The economic fallout of the coronavirus pandemic is pushing millions of consumers toward digital financing, and there are already signs that some companies will outcompete others and capture more of the market share. As ecommerce grows, so will the needs of the customers. 

Insider Intelligence’s Buy Now Pay Later report details key BNPL players, market trends, and business models leading the way and will likely come out on top in the US. 

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