Buy-now-pay-later: a seductive and rising trend

It is like the classic payment on account – but in a modern style: The fairly young “buy-now-pay-later” trend in eCommerce makes online shopping on credit possible. These buy-now-pay-later offers are convenient. A few clicks are all it takes, and payment is postponed until later. And it is a tempting thought, especially when thinking about the environment of high inflation and increasing prices we are currently living in. BNPL is a hot trend, this is what current calculations by GlobalData suggest. Global transaction values are exploding:

According to GlobalData, the worldwide transaction value of payments conducted via BNPL increased 3.5-fold in the past two years. Global BNPL market value increased from US$34 billion in 2019 to US$120 billion in 2021. According to the analysis, BNPL payments were responsible for 2.3% of the total eCommerce market in 2021. In other words, US$2 out of every US$100 spent in eCommerce were processed as a buy-now-pay-later payment. The surge in popularity for BNPL payments is not likely to stop in the near future. GlobalData expects the market to increase strongly also over the next few years to reach a total transaction value of US$576 billion by 2026. The convenience of the trend also has a downside, however. Even if the payments are postponed, the orders received have to be paid for it at some point. Those who make frequent use of such options need a great deal of discipline to keep an overview of their spending. The fact that it is especially young people who use BNPL – mostly millennials and generation Z according to the source – can be a matter of concern. Ambiguities are also felt on the vendor side: On the one hand, BNPL makes quick and high-priced purchases possible which would maybe not take place if the bills had to be paid right away. On the other hand, payments on credit result in a greater number of delays or defaults, which increases processing time and costs.

How is the buy-now-pay-later trend in eCommerce actually implemented and processed? How can customers conduct such payments? There are online payment providers that specialize in this specific payment method. Find out more about two of the most famous providers of BNPL – Klarna and Affirm – in the recently released eCommerceDB Payment Provider Reports.

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January 2023