Bnpl News: Understanding the Rise of Buy Now, Pay Later

The rise of Buy Now, Pay Later (BNPL) has been a game-changer for many consumers. BNPL services allow customers to pay for purchases in installments, often with no interest or fees.

Consumers are increasingly turning to BNPL due to its flexibility and affordability. In fact, a recent survey found that 75% of consumers prefer BNPL over traditional credit cards.

One of the key benefits of BNPL is its transparency, with clear repayment terms and no hidden fees. This is a major departure from traditional credit card agreements, which can be notoriously complex and confusing.

As BNPL continues to grow in popularity, merchants are taking notice and integrating BNPL options into their checkout processes. This is expected to drive even more growth in the industry.

BNPL is on the rise, and it's no surprise why. 11% of US digital buyers used BNPL to make a digital purchase in April 2024, according to an EMARKETER survey conducted by Bizrate Insights.

Total BNPL spending in the US will grow 12.3% YoY to $80.77 billion in 2024, a significant increase from previous years. This growth is largely driven by consumers looking for credit card alternatives to avoid accumulating debt.

BNPL providers like Klarna, Afterpay, and PayPal offer lower- or no-interest funding, making them an attractive option for those who want to avoid high-interest rates. In contrast, credit cards often come with higher interest rates and fees.

As a result, BNPL is becoming a popular choice among younger generations, with millennials using BNPL at a higher rate than other generations in 2024, according to EMARKETER's June 2023 forecast. Millennials are digitally savvy and have embraced digital payment solutions like mobile wallets.

BNPL works by breaking down the purchase price into smaller, more manageable segments. You can use a BNPL method to pay off online or in-store purchases piecemeal.

Consumers can pay a set monthly installment until the purchase is fully paid off, with some providers offering interest-free payments when made on time and in full. If payments are missed, there could be an additional charge for the late payment.

You don't need a certain credit score to use a BNPL service, though some providers may run a soft credit check to understand your credit history.

Our system integrates with various retail platforms to streamline your online shopping experience.

We support over 100 different retail integrations, including popular platforms like Amazon, eBay, and Walmart.

Our integration with Amazon allows you to access millions of products in one place, making it easier to find what you need.

You can also use our integration with eBay to bid on items or purchase them at a fixed price, all in one place.

Our integration with Walmart enables you to access a vast selection of products, including groceries and electronics.

With our retail integrations, you can shop from multiple stores at once, making it easier to compare prices and find the best deals.

Our system also allows you to keep track of your orders and shipping status across all your retail integrations.

BNPL services allow consumers to pay off purchases in smaller, more manageable segments. The purchase price is divided into set monthly installments, often with no interest if payments are made on time and in full.

You can use a BNPL method to pay for online and in-store purchases, and the payment plan can be broken down into as few as four monthly payments. For example, a $24 purchase can be paid off in four monthly payments of $6.

BNPL acts like a personal installment loan, but consumers don't need a certain credit score to use the service. Some providers may run a soft credit check to understand a user's credit history.

You can choose to pay via debit card, bank account, or credit card, and payments can be deducted automatically. You may also be able to pay via check or bank transfer in some cases, although autopay is often the default option.

The main difference between using BNPL and a credit card is that credit cards charge interest on any balance carried over to the next billing cycle. With BNPL, you can pay off the purchase in full without incurring interest, but missing payments may result in late fees.

Some purchases may not be eligible for BNPL financing, and there are limits on the amount that can be financed. However, many consumers have found BNPL to be a convenient and interest-free way to pay for purchases.

Klarna and Affirm are two major players in the BNPL (Buy Now, Pay Later) market. Klarna's 42.8 million US users will generate $21.99 billion in BNPL payment value by 2024.

Klarna is expected to surpass Affirm in payment value by 2024, with Affirm's market share of $20.16 billion being slightly smaller. Klarna's success can be attributed to its popular app, credit card, and omnichannel approach.

Klarna is expected to surpass Affirm in payment value by 2024. Klarna will generate $21.99 billion in BNPL payment value, with an average of $513.47 spent per user.

Klarna's success can be attributed to its popular app, credit card, and omnichannel approach. Its colorful marketing campaigns have also been a hit, featuring celebrities like Lady Gaga and A$AP Rocky.

In 2023, Klarna launched a new marketing campaign with Paris Hilton. To stay competitive, Klarna launched a US subscription service called Klarna Plus in January 2024.

With Klarna Plus, users can have their BNPL service fees waived for $7.99 per month. They'll also earn double reward points and get access to exclusive deals like discounts at Nike and Instacart.

Affirm is a notable player in the buy now, pay later (BNPL) market, with a significant user base and impressive spending habits. In 2024, Affirm is expected to have 16.4 million users.

Affirm credits its success to the Affirm Card, which has seen remarkable growth. Its GMV total was $224 million for the quarter.

Travel is a rapidly growing segment for BNPL providers like Affirm. Affirm has partnered with Booking.com and Evolve to tap into this trend.

Affirm's users are also big spenders, with each expected to spend an average of $1,227.34 in 2024. This is more than double what Klarna users are projected to spend.

The BNPL industry has faced criticism for its potential to lead consumers into unmanageable debt. A joint study by Barclays and StepChange Debt Charity found that 1 in 3 UK consumers who have used BNPL say it put them into debt.

Critics argue that BNPL providers lack standardized credit disclosures and clear billing dispute rights. This can make it difficult for consumers to understand the terms of their agreements and resolve issues that arise.

The UK government has responded to these concerns by outlining regulations for the BNPL industry. Banks may also view BNPL as a threat to their dominance on lending.

A 2022 report by the Consumer Financial Protection Bureau (CFPB) highlighted concerns about the growth of BNPL and its potential risk to consumers. The report noted that BNPL apps collect user data, potentially compromising consumer privacy and leading to market dominance by a few providers.

The CFPB's report also underscored concerns about the risk of debt accumulation, as consumers can use multiple BNPLs and increase their chances of delinquency and defaults.

Key concerns about BNPL regulation include:

Mobile wallets are increasingly integrating Buy Now, Pay Later (BNPL) options to cater to users' growing interest in this financial service. Mobile wallet providers like Google and Apple have also looked to capitalize on users' BNPL interest.

Apple has been a pioneer in this space, launching its BNPL offering Apple Pay Later in March 2024. The service was initially available to 79.26 million US Apple Pay users.

However, in June 2024, Apple announced that it will no longer offer its BNPL Apple Pay Later service. Instead, banks will soon be able to offer BNPL plans to their customers via Apple Pay and Apple Wallet.

Buy now, pay later plans typically charge no interest, making them a more affordable option for consumers. This is a key benefit that sets them apart from traditional credit cards and personal loans.

Compared to these traditional forms of credit, BNPL loans are fairly easy for consumers to get approved for. This is because the application process is often simpler and less invasive, making it a more accessible option for those who may have been turned down elsewhere.

To give you a better idea of the performance of BNPL providers, here are some common key performance indicators (KPIs) that they track:

Provider KPIs are essential for understanding the performance of Buy Now, Pay Later (BNPL) providers. They help track key metrics that indicate the success of their services.

Monthly unique users, by app, is one such KPI that BNPL providers use to measure their user base. This metric gives insight into how many customers are actively using their services each month.

Payments traffic share, by provider, is another important KPI that BNPL providers track. It shows the percentage of total payments made through each provider, indicating their market share and popularity.

Here are some common KPIs for BNPL providers:

These KPIs provide valuable insights into the performance of BNPL providers and can help them make data-driven decisions to improve their services.

For financially fragile users, the mean purchase price is significantly lower than for financially stable users. A staggering 62 percent of financially fragile users have a mean purchase price under $250.

In contrast, only about 44 percent of financially stable households have a mean purchase price under $250. This suggests a notable difference in spending habits between the two groups.

Financially fragile households tend to make more purchases than financially stable households, averaging about four more BNPL purchases per year.

BNPL loans can be a great option for those who need to make a purchase but don't have the cash upfront. You can get approved for a BNPL loan even if you've been shut out of other loan options due to a low credit score or lack of credit history.

One of the main advantages of BNPL loans is that they don't add to your credit card debt. However, they do add to your personal loan debt. If you're unable to pay, you may face penalties.

It's essential to understand the terms and conditions of a BNPL loan before making a purchase. You should consider whether the payments are affordable and what penalties you may face if you're unable to pay.

BNPL loans don't usually affect your credit score unless you fail to pay. However, missing payments can have serious consequences for your credit score.

To make the most of a BNPL loan, it's crucial to weigh the pros and cons against other options, such as credit cards and personal loans.

Here are some key things to consider when using a BNPL loan:

By understanding the benefits and risks of BNPL loans, you can make informed decisions about your financial situation.

Most BNPL loans require the borrower to be at least 18 years old, so if your teen is under 18, they likely won't be able to use a BNPL loan to purchase something on their own.

If your teen is old enough to use BNPL financing, they could be denied and need someone who has a strong credit history and good credit score to apply for the BNPL financing.

BNPL may break down the cost of an item into smaller installments, but it's not always the best way to go about buying something. For example, if a teen wants to buy a $100 jacket, BNPL may break down the cost into four installments of $25.

By requiring your teen to save up the full amount instead of using BNPL, you can help them learn about saving and budgeting their money. By the time they save up $100, the teen may not even want to spend it on the jacket anymore.

If your teen does use BNPL financing, make sure they know how it could impact their credit history, report, and score. It's essential to explain debt and the best ways to manage it, as well as how credit impacts teens and why it's important for their financial future.

Loan Details can be a bit tricky, but let's break it down. The dollar limits on BNPL loans vary from provider to provider and from retailer to retailer.

In general, the limits can range from hundreds to thousands of dollars. Some plans even set a per-purchase limit, so it's worth checking out before making a big-ticket purchase.

Dollar limits on Buy Now, Pay Later (BNPL) loans vary significantly from one provider to another, and even from one retailer to another. This means you'll need to check the specific terms and conditions for each plan before making a purchase.

In general, the overall limit on BNPL loans can range from hundreds to thousands of dollars. It's essential to know this limit to avoid overspending.

Some BNPL plans also set a per-purchase limit, which is worth checking out before buying a big-ticket item. This can help you avoid overspending on a single purchase.

When you're considering a Buy Now Pay Later (BNPL) loan, it's essential to understand the interest rate involved.

Most BNPL plans charge 0% interest as long as you make your payments on time.

However, if you're late with your payments, interest rates can skyrocket up to 36%.

Late fees are also common, usually ranging from $7 to $8, according to the Consumer Financial Protection Bureau.

These fees can add up quickly, so it's crucial to prioritize making your payments on time to avoid any additional charges.