The Biggest Market Segments and Regions for Buy Now Pay Later

Posted on July 25th, 2022

An alternative method of financing, Buy Now Pay Later (BNPL), is robustly attracting participants globally. It is an easy credit option offered by companies at the point of sale that allows users to purchase items without needing to make any payment upfront. They can plan to pay for their purchases at a later date or in fixed instalments pre-decided by the credit provider and user. Most of the time, BNPL does not require any KYC or high credit scores, and it mostly charges no interest or minimal interest, unlike credit cards, or personal loans, rendering it one of the most feasible credit options in today’s times.

Reasons for Growth of BNPL

BNPL offers tremendous benefits while evading the burden of credit scores and heavy loans. There are many reasons why BNPL is gradually becoming a mainstream payment option in many places.

–         Ideal setup for small credit offers for purchasing consumer goods, electronics, etc.
–         Consumers don’t require high credit scores to avail of BNPL services.
–         Low or no fees for opting for BNPL.
–         Easy instalment with a fixed amount and fixed dates.
–         Gives users better power to purchase.

Apart from the benefits and convenience associated with BNPL, one of the primary reasons for its exponential growth is the pandemic. With restrained financial activities, the slow pace of economies put a dent in employment figures and earnings in a majority of households, which, in turn, led to the upsurge in the number of people opting for BNPL during checkouts.

Facts & Figures

–         The BNPL transaction volume is expected to cross $680 billion by 2025.

–         In the USA alone, the gross number of users has increased by more than 300% since 2018.

–         The growth of the global market has almost doubled since 2019 because of the pandemic.

–         Digital payments are taking over an enormous market, where more than 80% of purchases are made online.

Biggest Sectors

With BNPL becoming a mainstream digital payment option, the sectors that have seen the most impact and volume are:

Consumer Electronics

The sector that has the highest number of BNPL transactions is consumer electronics. People prefer to purchase their electronics, like phones, TVs, video game consoles, etc., via digital payment nowadays. This trend has opened doors for users to opt for BNPL during checkouts, which is slightly easier if compared to Equated Monthly Instalments (EMIs).

Fashion & Garments

The second highest number of BNPL transactions was reported in the fashion and garment industry, which, again has witnessed a tremendous volume of digital payments.

BFSI

Banking, Financial Services, and Insurance have been key players in instrumenting the adoption of BNPL. Insurance providers are offering the option of BNPL to their new consumers.

Retail

With retail purchases opening the option of BNPL, people have experienced immense relief especially, because this is primarily a need-based industry.

Healthcare

The healthcare sector is not far behind, on BNPL’s list of most impacted sectors. The rise in the number of ailments and frequency of hospital visits, combined with the situation of the pandemic, has made it extremely difficult for people to plan and cope with their medical expenditures. This scenario has resulted in the astronomical growth of BNPL, however, this is a major reason why BNPL cannot be a mainstream option in healthcare altogether.

Media & Entertainment

Paying for subscriptions, tickets, and other activities in the media and entertainment industry has seen colossal growth with BNPL.

Biggest Market Regions

Although BNPL has been around for some years now, it is only recently that the phenomenon has caught up with mainstream payment options. Being a fairly new concept for a large part of our population, BNPL has struck a big market chunk in the following regions:

North America

The North American region has been the biggest BNPL market, where it owns almost 30% of the total share. Fintech, in general, has found the most active market in North America, which has been an underlying reason for BNPL’s popularity in the region. As more and more people want to evade high credit card charges, the pressure of having a healthy credit score in the US has people looking for alternative financing options, which has created the perfect market for BNPL.

Asia Pacific

Following North America is the Asia Pacific, which is gradually gaining ground in the BNPL market. India, particularly, has been in the limelight for its young population opting for alternative easy financing services like BNPL.

Europe

The sector that has seen a high volume of BNPL transactions is the European region. With digital finance taking over a major portion of the banking and financial industry in Europe, BNPL is also becoming a hit among European and UK consumers.

Latin America

Brazil is leading the Latin America fintech industry, which has made the onset of BNPL easier in the region. Latin America is a rapidly developing economy that demands options of easy credits that give more purchasing power to buyers without burdening the consumer much.

Middle East & Africa

The BNPL market share in the Middle East and Africa is at par with Latin America, where newly developing economies demand alternative financing without requiring too much from the user.

Conclusion

The growth in BNPL suggests a massive takeover of the mainstream payment options share. BNPL has thrived because of many reasons that have impacted the market and influenced people’s decision-making in financial matters. People see BNPL as an option that gives more purchase power to the consumer. 

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