The e-commerce transaction value of BNPL is booming globally

By Puja Sharma

BNPL lending was worth around a few billion U.S. dollars in 2019 but is estimated to increase by 1,200% by 2024, according to the report by Bigcommerce.

Instead of paying with credit cards or other forms of financing, BNPL solutions allow shoppers to purchase products and pay in instalments over time. It is common for these solutions to be offered to customers with low-interest rates and no hidden fees, meaning that they won’t have to pay any additional fees.

Many merchants offer their customers the option of paying over time. Financial stress was exacerbated by COVID-19, including missed payments and shrinking credit limits. The decline in usage of credit cards in the United States is partly due to this, leaving an opening for new payment methods to emerge – which BNPL exploited. Early on, the idea of paying now and later (or “pay in four”) fueled its popularity. In addition to offering lower interest rates or longer repayment terms, these BNPL companies are growing and continuing to see billion-dollar annual successes.

Even though most BNPL transactions occur online, brick-and-mortar stores can also offer this type of payment plan. BNPL customers typically generate QR codes using their app, which are scanned at the point of sale. Retailers get credit, and customers pay later. Having the option to pay when and how they want – without accruing interest – can increase purchasing power and allow customers to make their financial schedules.

Rewards and incentives

Today, online retailers throughout the world accept credit cards for small and large purchases. The BNPL market now generates more than $100bn annually. An Afterpay report estimates that 12% of online fashion retail purchases are made through BNPL providers.

It creates an ecosystem of loyal and active repeat customers when consumers use to BNPL regularly. The ability to discover brands and stores that offer specific BNPL providers from a provider’s shopping marketplace is improving.

A broader range of payment options

On average, younger consumers use BNPL more than the rest of the sample. BNPL has been utilized by 6.2% of millennials and slightly more than 5% of bridge millennials to purchase physical goods. When consumers transact online, the gap between older and younger shoppers becomes more pronounced. Every month, 10.2% of millennials use BNPL. As of spring of this year, the number of Generation Z users has risen from 2% in the winter of 2022 to nearly 7%.

“purchase now, pay later”: It is not permissible for retailers to advertise that they accept credit cards in their emails and social media marketing campaigns. Consumers may not be aware of BNPL, which is why such an option may be worth promoting in ongoing marketing campaigns. Despite consumer interest, it is still uncommon for retailers to offer a buy now and pay later option at checkout. Social media marketing to increase awareness among customers works well to increase their awareness.

As many as 12% of all online fashion purchases in the United States are made via BNPL, and the range of products available for instalment payments is expanding rapidly. It will be possible to Buy Now, Pay Later for more than just tangible goods.

According to the IBS Intelligence propriety data, global Buy Now, Pay later transactions are predicted to increase by over $450 billion between 2021 to 2026. This would mean a further acceleration of what was seen between 2019 to 2021, when the alternative payment method increased by almost 400%. BNPL reached a global market share of around  3% in 2021—with 8 out of 10 Buy Now Pay Later markets worldwide being in northwestern Europe.