There’s a new hot topic floating around the payments industry: buy now, pay later (BNPL). According to a recently released report by CBInsights, the BNPL installment-credit option could reach $1 trillion in U.S. volume by 2025 – that’s 10 to 15 times the current level.
Affirm, a BNPL provider, also announced that it would be rolling out a buy now, pay later debit card, fueling this trend even further.
The Driving Force Behind Buy Now, Pay Later
There are several factors pushing the rapid rise of this payment alternative and the emergence of key BNPL players. The most influential, of course, is the unknowns and restrictions that took place in 2020. Fear of contracting the coronavirus played a huge role in consumers opting for digital payment methods. The ever-increasing consumer trend of convenience and speed has also played a big part.
The U.S. user counts exploded in 2020:
- Klarna reported a 106% increase to 11 million
- Afterpay revealed a 261% jump to 6.5 million
- Affirm shared a 63% rise to 3.9 million
In truth, banks and card issuers have offered point-of-sale financing for years. So, why is it taking off now? In addition to the pandemic, the non-traditional approach offered today is simply more attractive.
It would seem that these BNPL players “have acquired customers and merchants over the past few years by prioritizing changing customer preferences, flexible financing options, and cheaper fees or interest—areas where traditional banks, credit card issuers, and lenders fall short,” says the report.
Essentially, BNPL revives the old concept of layaway plans. It has been so successful thus far that 55.8% of consumers have used a buy now, pay later service (up from 37.65% in July 2020). Another 53% of respondents who have never used BNPL say they might within the next year, according to a new survey by The Ascent.
How to Expand Payment Processing Options
As a result of the changes that have taken place this past year, many business owners are seeking ways to expand their payment processing options. With so many providers available today, it can be hard to know which one you should partner with. The key is to do a little research.
Does the provider specialize in your business type and industry? Do they understand your customers’ needs and changing preferences? Do they make it their mission to stay up to date on the latest trends, like BNPL? Browsing the many reviews and resources available via bestpaymentproviders.com can help you jump start this task and find the right processor and payment method options for your business.
Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of Buy Now, Pay Later. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie with ice-cream on his backyard porch, as should all right-thinking people.