According to Worldpay’s 2020 Global Payments report,“buy now pay later” is the fastest growing e-commerce payment method.
The idea of buying a product now that is beyond your budget and that to pay for that product later in many ways sounds too good to be true. However, this is possible by an innovative digital online payment option called Buy Now Pay Later (BNPL).
BNPL is a form of short-term financing the helps consumers make purchases with a small down payment and wait to pay for the rest of the balance at a later date.
Buy now, pay later is becoming an increasingly popular way for people to shop, particularly online, since oftentimes these plans don’t charge interest and are much easier for consumers to get approved for than traditional loan methods.
Customer gets the flexibility to choose suitable installment payment options, which will spread over a certain span of time. Absence of any interest cost and strict approval requirements makes BNPL a sought-after, convenient payment option, especially for millennials .
In North America, “buy now pay later” market share is expected to triple to 3% of the e-commerce payments market by 2023.
In other regions, such as Europe, the Middle East and Africa (EMEA), “buy now pay later” already accounts for almost 6% of the e-commerce payment market and is projected to reach nearly 10% by 2023.
Win-Win Bid for all Parties
BNPL is a win-win proposition for all the parties involved in a transaction, such as the consumer, merchant as well as the issuing bank:
- The consumer gets the option to buy stuff that was his layaway target.
- The merchant gains from more customers and better conversion, higher order value, rise in the repeat purchase rate and more benefits.
- The issuing bank profits from elevated spending.
The major BNPL players are U.S. PayPal, Canadian Affirm Holdings, Swedish Klarna, and Australian Afterpay. Each of these companies already boasts a big customer base comprising millions of merchants and customer accounts.
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