Buy Now Pay Later Market Size, Share, Report 2024 to 2033

Buy Now Pay Later Market Size and Growth 2024 to 2033

The global buy now pay later market size was valued at USD 30.41 billion in 2023 and is expected to be worth around USD 181.76 billion by 2033, growing at a compound annual growth rate (CAGR) of 19.57% from 2024 to 2033. The buy now pay later (BNPL) market is a young sector that has been rapidly expanding offering consumers different payment options allowing them to make payments for goods or services in installments. However, this model has received much acceptance by many companies across various segments, including retail and travel, since they are short-term, interest-free tussle-free flop plans.

The main factors driving the growth of the BNPL market, involve growth in demand for flexible-and-non-conventional payment solutions especially among young and digitally-savvy generation that is reluctant towards credit cards. Further, the integration of BNPL services has made the services easily accessible through e-commerce platforms as well as the points of sale for purchases and this has boosted the usage. With these regulatory bodies now waking up to the potential problems in consumer protection in this area, the market is gradually trending towards responsible lending. This growth route clearly outlines the trajectory of digital payments and consumer finance and puts BNPL in a strategic place in the future of financial services.

• The BNPL industry is growing fast from 2019 to 2021, surveyed Five lenders’ BNPL loans that originated in the U.S. increased by 970%, from 16.8 to 180 million, and the value of the dollar volume of those originations is $97 billion for the year 2008. Gross Merchandise Value (GMV) increased from $2 billion to $24.2 billion.
• There is product differentiation in the BNPL industry. Apparel and beauty merchants, who had recipients together contributed to just an 80.1 % share of the total originations in the year 2019 while they represented only 58 percent in 2021.
• BNPL usage for “every day” or “necessity” purchases (gas, groceries, and utilities) was $229.2 million in 2021 (0.9 percent of GMV), up 434 percent from $42.9 million in 2020, which itself was up 1,207 percent from $3.3 million in 2019.

Report Highlights

• North America egion emerged as the leading contributor, capturing an impressive 32.80% of the total revenue share in 2023.
• Asia-Pacific region has generated revenue share of 28.70% in 2023.
• By enterprise size, the SMEs segment has generated revenue share of 54% in 2023.
• By end user, the retail segment has captured revenue share of 69% in 2023.
• By channel, the Point of Sale segment has garnered revenue share of 84.30% in 2023.

Buy Now Pay Later Market Growth Factors

• Increasing Consumer Demand for Flexible Payment Options: BNPL services are popular options for consumers since they form a less conventional approach to credit than traditional credit products. The emerging fashion of online purchasing has meant that through installment-based payments consumers can purchase products now and then pay through installment-based payments without the heavy interest charges on credit cards. This change drives the use of BNPL services in almost every industry, including hospitality and tourism.
• Technological Advancements in Fintech: Uses of innovative technology within the financial sector such as automation, artificial intelligence and credit scoring services, and real-time payments for BNPL services are growing rapidly. SMEs can use these technologies to make quick credit decisions, become integrated partners for e-commerce sites, and have better anti-fraud mechanisms than traditional banks. As BNPL providers draw on these innovations, the usability and security of the platforms are key attractions from the customer and merchant perspectives.
• Increased Focus on Financial Inclusion: BNPL services offer financing solutions to consumers who cannot be put up by credit systems. For those who used less scores, or fear inking themselves with high-interest utilization, then the BNPL is appealing. Such concentration on financial inclusion is contributing to extending the use of BNPL solutions, especially among the millennial, tech-savvy generation in their need for transparent and affordable payment solutions.
• Support from Retailers and E-commerce Platforms: Providers and merchants have been aligning themselves in providing retailers BNPL services as more consumers are attracted to merchants that have the service to boost the conversion rate and the average order value. From the business side, BNPL appeals as a way to attract more customers, lower cart abandonment rates, and generally improve the checkout process. With most online shops adopting BNPL as one of the ordinary payment modes, the tool is increasingly becoming a sales drive and clients’ loyalty tool.
• Rising Demand for Efficient Financial Solutions in a Digital Economy: It is approximated that there is a constant change in the global economy hence Consumers need faster and easier financial services. BNPL serves this demand by presenting a convenient and easy payment mechanism that can be acquired without much hassle by having a mobile application or access to some online store. As the forms of digital payments develop, BNPL is set on the stage as a major actor in the future of consumer finance, especially in those countries where the e-commerce industry is experiencing rapid growth.
• Expansion into New Markets and Industries: After starting in the retail industry, BNPL is spreading to different industries, including the healthcare, educational, and travel industries. The flexibility of the BNPL model is evident when consumers pay for medical costs, tuition fees course materials and even holidays. These expand into a variety of markets making BNPL a very viable area to expand into for providers as they do seek to diversify.

Buy Now Pay Later Market Trends

• Increasing Consumer Preference for Flexible Payment Solutions: As customers turn their attention to online buying of goods and services, consumers are demanding an option to have an easy to make payment options without the rigid one that is credit. BNPL services resolve this problem by offering consumers a way to make purchases and pay over time without this pressure. This has been more popular among the young people, who opt for ease of payment, clear balance and low interest rates other than using credit cards.
• Integration of BNPL Solutions in E-commerce Platforms: In recent years, e-commerce companies have aligned themselves with BNPL companies to offer installation payment methods at the point of purchase. This integration aims to improve the satisfaction of a client by providing him/her with many options of payment that in return make the retailers enjoy higher sales and enhanced conversion rates. Since the trend of online shopping is picking up the pace, this is becoming a norm for practically all the online stores now.
• Expansion of BNPL Beyond Retail: This is because BNPL has evolved not to be only a method of buying retail products. It has ventured in to new areas like travelling, health and education, where consumers can pay for their holidays, or even operations through small, weekly payments without interest. It is also helping the BNPL providers to look at other forms of markets containing a diverse range of consumers to whom they can extend their services.
• Regulatory Scrutiny and Consumer Protection: Since the BNPL market expands, so does the attention paid to it by the regulating authorities. Risks to consumer interests, information concealment and excessive credit demand have stirred government’s into thinking of increasing regulation. This increased oversight will now help guide the future of the BNPL industry, so that lending continues to be done in a sustainable manner where consumers are informed sufficiently of the labels of their payments.

Report Scope

Buy Now Pay Later Market Dynamics

Drivers

Increased Consumer Adoption of Digital Payments

• This is because, in the contemporary world, with most consumers’ moving away from the conventional banking and credit systems, there is increased appetite for the new kinds of payment solutions such as BNPL. This trend is considered to be a response to the simplicity, the speed of order, and an increased level of clarity that BNPL services provide, which is more preferable for tech-savory buyers.

Technological Advancements in Financial Services

• BNPL platforms are becoming efficient due to artificial intelligence, data analytics, and automation being applied in fintech currently. These technologies assist in doing online credit check, identify fraud and send relevant offers effectively in the BNPL fulfilling the need of the hour for both consumers and merchants.

Restraints

Potential for Consumer Debt Accumulation

• Besides flexibility, consumers can be limited by their purchases since multiple BNPL contracts from different platforms can lead to an excessive number of debt. This can lead to more debt building, which if not proper managed by the users in terms of repayment will build up tremendously.

Limited Profitability for BNPL Providers

• A large number of BNPL players have insignificant to no interest rates for consumers, instead, they rely on merchant fees for their revenue model. This model may present profitability issues for certain business sizes, or during an economic outbreak when expenditure is restricted.

Opportunities

Expansion into Emerging Markets

• An increase in financial inclusiveness in the researched regions make BNPL services penetrate virgin territories within developing nations. The increasing popularity of m-commerce in areas with increasing numbers of Internet users provides BNPL providers with opportunities to diversify their services and establish operations in new markets.

Partnerships with Traditional Financial Institutions

• It has recently been seen that BNPL platforms are entering partnership with banks and other institutions to expand their services. These collaborations can help to access more amount of capital, regulatory compliance and the larger consumer base which will help in the growth of BNPL.

Challenges

Regulatory Compliance and Changing Legislation

• Continuous changes in the regulation is one of the biggest challenges facing BNPL providers today. Growth in consumer awareness about the need for transparency and enhanced consumer protection will necessitate the BNPL sector to meet the standard without compromising on the flexibility offered to consumers.

Consumer Awareness and Education

• That is, while consumers are embracing BNPL services, there is still little awareness of these services and their terms of reimbursement and fees. Private issuers will have to spend more on clients’ awareness and promotion as to ensure consumers will not (theoretically) use credit cards irresponsibly.

Buy Now Pay Later Market Segmental Analysis

Application Analysis

Retail: Popular in retailing, BNPL enables customers to buy products and pay for the same in several installments instead of a lump sum. This application is mostly used in e-commerce and Physical stores because the convenience it provides to the users makes it very flexible.

Travel: Use cases are emerging for the travel sector where BNPL solutions help consumers finance their holidays, flights, and accommodations. This is especially felt where substantial amounts are involved and paying fully strains the pocket.

Healthcare: There are available choices of payment plans to be implemented by the healthcare service providers for their medical, therapeutic, and dental services. This way patients can make their healthcare costs affordable by paying in installments without having to use normal loans or credit cards that attract high interest rates.

Education: School and service industries are adopting BNPL to assist learners and parents in financing classes, credentials, and tuition charges. This is a good way of investing in education without having to pay upfront for the education investment.

Product Analysis

Interest-Free Installments: The common type of BNPL products is interest-free installments which let consumers pay for the acquisition in installments without paying any extra interest. This type is most enticing because it is easy and cheap to implement.

Pay-in-4: “Pay-in-4” means spreading of the total amount into four equal installments. The consumer pays the first amount when the product is purchased; the other three installments are made in the next few weeks or months.

Pay Later: With this product, consumers can safely get the products without incurring any charges for at least 30 days or more. It gives some extra cash convenience and is used to pay for a more expensive or non-necessary item.

Split Payments: Other forms are similar to split payment options, which allow the distribution of the full amount over equal parts, depending on consumers’ possibilities. By being able to sacrifice conventional payment terms of relatively lower interest, this product addresses users’ demands for more flexible payment terms.

Enterprise Size Analysis

Consumers: The first target consumer of BNPL services is individual consumers, particularly the young generation, who do not like relying on credit lines. Therefore, BNPL has an obvious benefit because it is not associated with interest payments as credit card technology may be interesting to savvy buyers.

Small and Medium Enterprises (SMEs): This is as BNPL services have been adopted by SMEs to finance their inventory or even business equipment to ease cash flow. For businesses, BNPL is a straightforward financing type that eliminates the need for a loan or business credit card application.

Large Enterprises: Large firms are also availing of BNPL services, especially within the retail and e-commerce industries. These enterprises apply BNPL as a way of increasing customer traffic and therefore sales, especially during festive seasons or for big transactions.

Technology Analysis

Artificial Intelligence (AI): It provides an extensive contribution to the evaluation of credit risk, the automation of loan granting, and real-time fraud identification. It improves the BNPL services’ speed and security, allowing credit decisions to be made without involving many people.

Machine Learning: Risk assessment is enhanced by machine learning since consumers’ conduct, past purchases, and repayment info are considered by algorithms. It helps BNPL firms to have better-targeted payment installments and less default level.

Mobile Payment Platforms: Mobile applications are becoming more common for accessing BNPL services since most of the services are offering ways to manage purchases and track transactions utilizing smartphones. Mobile platforms remain convenient and easily accessible and this explains why BNPL solutions are so popular among consumers.

Secure Payment Gateways: Growing adoption of online payments and pocket-friendly payment gateways Cybersecurity plays an important role in shielding valuable customer information and facilitating the seamless transactions. Encryption and multi-factor authentication bear technologies that used to increase the security of consumers and businesses.

Buy Now Pay Later Market Regional Analysis

North America: The largest share of transactions is observed in North America because of such factors as the developed infrastructure of online payments and MRC, high demand for BNPL services, and relatively high investment in the fintech industry. Currently, the main BNPL operators and financial technologies pioneers are located in the United States, which stimulates its extensive usage in different fields, including retail. As consumers demand more convenient payment solutions, Canada, having a moderate online consumer base and a rapidly expanding FinTech sector, is also steadily adopting BNPL.

Europe: Europe is demonstrating tremendous growth in the BNPL sector due to governmental initiatives, technological advancement, and high consumer interest in flexible payment solutions. UK, Germany, and France are front runners in the regulation attempt, pushing for improved transparency and consumer protection in BNPL operations. Thus, the market is actively developing due to the EU’s concerns with responsible lending and promoting payment methods enabled by digital payments on retail and e-commerce sites offering BNPL options at the checkout.

Asia-Pacific: The Asia-Pacific region is considered to form the largest and most rapidly growing BNPL market due to growing e-commerce penetration rates, increasing disposable incomes, and a relatively young demographic with high technological literacy. Some countries leading this growth are the Australian, Indian, and Chinese consumers who are shifting more toward BNPL as opposed to credit facilities. Substantial funding in the development of digital payment systems together with increased partnerships between BNPL providers and local merchants and increased partnerships between BNPL providers and local businesses, are encouraging the use of BNPL services across many sectors such as retail, travel, and education.

LAMEA: The LAMEA BNPL market is relatively unknown but holds potential where e-commerce is being adopted and there is a young population. BNPL is popular in Latin America, and countries such as Brazil, and Mexico are experiencing growth in consumer interest in such products due to flexibility. Similarly, the Middle East region is also emerging as another growth area for BNPL service as a part of the broader maturation of digital payment solutions in the UAE while Africa is gradually moving in the same direction effectively leveraging the advancements in fintech infrastructure and online shopping.

Buy Now Pay Later Market Top Companies

• Afterpay
• Klarna
• Affirm
• Zip (formerly Quadpay)
• Sezzle
• PayPal (Pay in 4)
• Splitit
• Perpay
• Openpay
• Laybuy
• ViaBill
• Humm
• Bread
• Uplift
• LatitudePay
• Zilch
• Scalapay
• Sunbit
• Tabby
• Billie

Among the new entrants into the buy now pay later (BNPL) industry, such as After Pay are taking advantage of the increasing need for flexible payment solutions for the consumer and delivering zero-interest installment payment services and solutions to retailers across the world. Pay-later specialist Klarna, in contrast, is growing a BNPL portfolio, which includes pay-in-4 and deferred payments for both online and offline purchases, to help consumers make purchasing decisions and manage their finances better. Some such new players are altering how people engage in credit as they offer new modes of payment outside the regular lending channels.

At the same time, large players like PayPal have already enriched BNPL services with their long years of experience in digital payments and have a great competitive advantage in this market. Square also has joined the BNPL market by acquiring After Pay, proving how credit card companies progress to adapt to purchasers’ needs at the present times. These newcomers, as well as today’s industry leaders, consistently introduce inexperienced consumers to new opportunities to take out BNPL through fruitful collaborations and advanced technologies.

CEO Statements

Penny Lee, President and CEO of the Financial Technology Association (FTA):

"We look forward to providing additional comments to the CFPB and distinguishing BNPL from products whose business models rely on revolving debt and high consumer fees."

Grant Halverson, CEO of McLean Roche:

"BNPL is already at saturation point in Australia with 7 million accounts and 3.8 million users out of a 26 million population.  ZIP's ANZ business has flatlined as has Afterpay while market leader PayPal is also at single digit growth. All these fintech app players now issue credit cards with high fees. So much for the claim BNPL apps would destroy cards. They have had to join the credit card pack to attempt to become profitable, while getting ready for regulations in 2025 which will slow them down and add costs."

Recent Developments

Major players of the BNPL market are investing in digital payment innovations entered mainly on providing short-term, interest-free, and flexible credit payment solutions for consumer and commercial entities. Such companies are at the forefront of advancing technologies such as Artificial Intelligence, and real-time credit scores that are adopted to ease the process of purchasing goods and services. Notable developments in the BNPL market include:

• In September 2024, South Korean multinational conglomerate Lotte Group, launched the buy now, pay later app for online shopping at Lotte Mart hypermarkets and supermarkets, which offer a wide range of products, from food and household appliances to electronics, to nearly 10,000 customers each month.
• In September 2024, Zepto, the quick commerce platform, launched 'Zepto Postpaid' the new feature on its app, requesting users to join the waitlist to get 'exclusive early access'. As per the limited information available on the app, Zepto Postpaid will offer users "interest-free repayments" of up to Rs 5,000.
• In June 2024, Apple Pay Later, which allowed iPhone customers to split purchases into four payments, is being discontinued by Apple after just a year. The company will now rely on established industry leaders like Affirm and Klarna. This move acknowledges the challenges of building a financial services business from scratch.

Some of these advances capture the growth of the BNPL market through acquisitions, partnerships, mega funding, and a rising interest in the variety of installment payments among consumers. Companies are pursuing the growth of product portfolios, improving clients’ experiences through mobile applications, and engaging with the authorities to provide the necessary consumer protection in the field of small-ticket lending. All these endeavors have the general objectives of improving consumer credit availability, increasing sales for merchants, and enhancing consumer’s financial options. Other factors such as technological advancement in fraud detection, Artificial Intelligence in credit scoring and smooth integration of BNPL in checkouts are other factors boosting the adoption of BNPL around the world.

Market Segmentation

By Application

• Retail
  • Consumer Electronics
  • Fashion & Garment
  • Others
• Travel
• Healthcare
• Education

By Channel

• Point of Sale (POS)
• Online

By Product

• Interest-Free Installments
• Pay-in-4
• Pay Later
• Split Payments

By Enterprise Size 

• Consumers
• Small and Medium Enterprises (SMEs)
• Large Enterprises

By Customer

• Gen Z (21-25)
• Gen X (41-45)
• Millennials (26-40)
• Baby Boomers (56-75)

By Technology

• Artificial Intelligence (AI)
• Machine Learning
• Mobile Payment Platforms
• Secure Payment Gateways

By Region

• North America
• Europe
• APAC
• LAMEA