Young consumers are attracted to buy now and pay later as more companies entering into the space

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Buy now pay later service is driving many fintech companies into the world of credit offering and installment payments. Young consumers are attracted to BNPL because it provides easy loans with few barriers. The major reasons consumers opting these services are the inability to pay the full price of a product or service, budgeting, and avoiding interest charges or fees. BNPL is a better form of credit than credit cards, resulting in hidden fees, penalties, and compounding interest.

In addition to major players in the BNPL market such as AfterPay, Affirm, Klarna, LazyPay, Simpl, ZestMoney, and PayPal, many new companies are entering this space. For instance,

• Apple, the world's second-largest smartphone manufacturer, has announced its plan to enter into BNPL space in June 2022. With this new Apple Pay Later service, the company is expanding its financial services, including credit cards and mobile payments to BNPL. Apple Pay Later allows users to pay for products in four equal installments monthly without interest. As per industry experts, key competitors in the BNPL space such as PayPal, Affirm, and Klarna are in trouble with the new entrant. 
• National Australia Bank (NAB) launched NAB now pay later service in May 2022. This service allows users to access up to US$ 695 and split payments into four installments wherever a visa is accepted. NAB now pays later services and offers no late fees, account fees, and interest. This service can be integrated into the NAB app, allowing customers to add this service to their digital wallets as a virtual card for online or in-person payments. NAB is the last bank of the big four that introduced some versions of BNPL. 
• Rite Aid, an American retail pharmacy chain, has partnered with BNPL payment platform AfterPay to provide its customers an easy way to purchase products and pay in four installments without additional cost when paid on time. Rite Aid is planning to launch its BNPL offering to online customers at its e-commerce site, and it will roll out this flexible payment option in stores in the coming months.

To sustain the competition from new entrants into the BNPL market, existing market players are expanding their offerings by partnering with other platforms. For instance, BNPL provider Affirm has partnered with Singapore's online travel agency Agoda to provide BNPL options for approved travelers. Travelers can book hotels costing more than US$ 50 on the Agoda platform and make interest-free payments every fortnight or once a month through Affirm's checkout. As traveling has become normal, like pre-covid level, the travelers are now seeking flexible options to pay for trips over a time instead of a lump sum amount. 

According to PayNXT360’s Global BNPL Consumer Survey (Q2 2022), around 47% of young consumers in the age bracket of 25-34 years in India and 67% in the United States are early adopters of BNPL services. Furthermore, the Australian BNPL space is flocked by more than 71% of millennials. Based on the statistics, it is evident that most young consumers are using BNPL services worldwide. The dominating segments include fashion, electrical goods, household appliances, and furniture. Increasing smartphone penetration, rising adoption of social media among millennials and influencers partnering with BNPL companies are also driving growth opportunities for the BNPL market in coming years. 

To know more and gain a deeper understanding of the global BNPL market, click here.