The percentage of people who have never used the buy now, pay later services dropped to 35% from 50% in 2022 and 56% in 2021.
This statistical figure itself reveals the entire story of the BNPL market upscaling like a rocket.
What’s really making this skyrocket happen?
How to Make the Most of Your Money: Buy Now, Pay Later
Short-term financing, sometimes known as “buy now, pay later” (BNPL), enables customers to make immediate purchases and spread out their payments over a longer period of time, with little or no interest charged.
Younger consumers’ preference for BNPL. The immediate satisfaction (and postponed anguish of making a complete payment) that BNPL offers is appealing to the generation born after 1995.
How to Choose the Right Buy Now, Pay Later (BNPL) Company?
Some examples of BNPL providers include Sezzle, Afterpay, Paypal Pay, and Amazon Pay, all of which operate in the realm of financial technology. Loans with interest and interest-free loans are both considered BNPL. The only real distinction is that late payment fees are typically assessed to clients.
Read: Unveiling The Indispensability: 5 Crucial Financial Reports For Your Company’s Success
To facilitate in-store and online purchases, BNPL businesses develop and maintain a mobile app-based payment system. When a customer makes a purchase through the BNPL app, the business receives payment instantly, and the customer makes equal payments over a predetermined length of time (typically without interest).
According to research conducted by McKinsey, established BNPL providers spend roughly 70% as much on customer acquisition as private-label credit card issuers.
CB Insights reports that the BNPL business has expanded at an annualized pace of 58% since 2015. This rapid expansion can be attributed to the ease with which providers like Afterpay and Klarna are able to gain clients in comparison to more conventional payment methods.
Read:Â How Can Banks Stay Competitive With A Secured IT Security Infrastructure?
Top BNPL Companies
What Is the Interest Rate on a BNPL Loan? Â
As long as payments are made on time, the interest rate for most programs is zero. But if you don’t, you could face interest rates as high as 36%.
The Consumer Financial Protection Bureau (CFPB) reports that the plans may impose late fees of $7 or $8.
Where Will the Future of BNPL Take Us?
As more people look for ways to spread out the cost of large purchases, the buy now, pay later (BNPL) sector, an alternative to credit cards whose popularity skyrocketed during the pandemic, might surge to about $3.7 trillion by 2030.
According to a report published by the Consumer Financial Protection Bureau in September 2022, the number of BNPL loans originated in the United States by the five lenders assessed increased from 16.8 million in 2019 to 180 million in 2021.2Â
Another CFPB investigation from March 2023 revealed that borrowers who used BNPL financing were more likely to use high-interest financial products such as bank overdrafts, payday loans, pawn loans, and credit cards.
Read: Top 15 Business AI Tools For You
In addition to providing BNPL, service providers will diversify into new areas. In order to innovate and draw in more clients, CB Insights believes BNPL firms will provide debit cards, high-yield savings accounts, and loyalty programs. There will be resistance from established banks that will prevent this from happening.
While Goldman Sachs purchased BNPL supplier GreenSky in 2021, other financial incumbents like PayPal are already offering their own split payment plan choices. Currently, BNPL payments only represent a small percentage of worldwide e-commerce expenditure (2.1% in 2020 according to Worldpay), but this is expected to grow as the technology develops and becomes more widely adopted.Â
Conclusion
Finally, the BNPL business model is likely to persist and grow since it enables customers to make substantial purchases without immediately having to come up with the entire cost.
 [To share your insights with us, please write to pghosh@itechseries.com ]Â
