- As people look for alternative financing options, buy now and pay later solutions continue to gain popularity.
- Globally, $680 billion will be spent on transactions by the BNPL industry in 2025. Find out more in our Get a Buy Now and Pay Later Report
- Do you work in the Payments & Commerce industry? With data-driven research, gain business insights about the latest technology trends, market trends, as well as your competitors.
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. The market is growing, which means that financial services companies are competing more.
Insider Intelligence gives you an overview of the companies and the business models that they’re using to be successful in this shifting market.
COVID: Ecommerce financing growth
Accelerated the coronavirus pandemic EcommerceMarket growth has led to an increase in the demand for online financing options. Because BNPL products are native to online shopping, the surge in ecommerce boosted these providers’ reach.
Many consumers were left without jobs and financial security due to the pandemic. They also needed more flexibility when shopping. Many consumers did pay off their debts in the crisis. Interest-free BNPL is an attractive alternative to racking another high. Credit card balance.
Buy now and pay later
The BNPL industry has modernized installment and layaway payments to give consumers flexible payment options. 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. This forecasts a 13.23% compound annual growth rate (CAGR), compared to the $285 billion industry recorded in 2018.
While some BNPL products are available in-store they can also be ordered online via ecommerce. 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 and uses of BNPL
Companies are vying for a piece of this lucrative market and looking at a variety of options to adopt BNPL products or 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.
These are just a few examples of company examples:
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.
These are just a few examples of company examples:
Like what you’re reading? Click here to learn more about Insider Intelligence’s leading Financial Services research.
Retroactive providers
Consumers can get financing from retroactive providers for any purchases they make on their credit cards after the fact. These financing providers are mainly issuers and offer flexible payment options for purchases.
These are just a few examples of company examples:
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
Industry analysis: Buy Now, Pay Later
The economic consequences of the coronavirus epidemic are pushing millions of consumers to digital finance. Already, there are signs that some companies may outcompete others and take more market share. Customers’ needs will change as ecommerce expands.
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.
