‘Buy Now Pay Later’: Everything You Need to Know [2022]


‘Buy now pay later’ is now a massive market. Massive as in trillions, not billions. For reference, the entire US GDP is about $25 trillion in one calendar year.

Every business opportunity with a large pot up for grabs attracts new entrants.

New buy-now-pay-later players are entering the industry to cash in on the booming trend.

It’s huge, and it’s spreading across all major continents.

What’s happening in BNPL

Here’s what’s been happening in the buy-now-sell-later market just recently:

– Revolut, one of Europe’s largest virtual banks, has announced that it plans to enter the ‘buy now pay later’ market.

– PayPal has paid $2.7 billion for the acquisition of Paidy, a Japanese ‘buy now pay later’ platform.

– Goldman Sachs entered a deal to buy GreenSky, a ‘buy now, pay later’ firm that arranges loans for large one-time purchases such as cosmetic surgery and construction projects. The GreenSky acquisition is part of Goldman’s effort to do more consumer, main street banking.

– Monzo, a major virtual bank, has announced plans to enter the BNPL market.

– Scalapay, a major European player in the buy-now-pay-later market, has raised $155 million.

– Australia & Africa: Zip, an Australian BNPL provider, has acquired Payflex, a South African counterpart.

– BNPL is spreading beyond US/Europe: Pace, a Singapore-based buy-now-pay-later provider, has raised $40 million in Series A funding.

– BNPL is being adopted by B2B firms: Slope, a company that offers buy-now-pay-later for B2B, raised $8 million.

– Google is dabbling with BNPL: Brian Freiesleben reported that Google is testing the concept of showing a $0 price tag for products that offer a buy-now-pay-later option.

– Microsoft acknowledges BNPL growth: Microsoft stated that BNPL is “most popular with Gen Zs and millennials and is currently the fastest-growing e-commerce payment method globally.”

Pay later and be proud

Bloomberg reported on a TikTok craze involving Klarna, another buy-now-pay-later company.

Younger consumers are increasingly using these platforms and they’re proud of it.

One reason is many younger shoppers don’t qualify for credit cards.

Buy-now-pay-later companies say they rely less on traditional credit scores and reports and in some cases don’t use them at all. Doing so allows them to approve more consumers.

Shoppers gain the ability to buy things even without cash on hand. This translates into higher sales for retailers.

Many market research firms, the buy-now-pay-later market to get up to the $1 trillion mark by 2026.

How can small entrepreneurs capitalize on this trend?

If you want to increase your conversion rates, adding a buy-now-pay-later option could be a good place to start.

Things become more affordable if they can be paid for over time rather than all at once.

If you sell on Amazon, this option should appear on your dashboard soon. If you use Shopify, you already have Shop Pay Installments.

What this means for you

Are you planning to add buy-now-pay-later to your store? Google may “force” you with their $0 incentive if you don’t.

If you’ve tried to sell more expensive items in the past and weren’t successful, now might be a good time to try again.

Paying in installments has never been easier for the average consumer than it is right now.

If you’re selling in countries other than the US and Western Europe, there’s a good chance that a dominant player will emerge and enable this option. The future of the BNPL market appears to be bright.

How do you pick a Buy-Now-Pay-Later (BNPL) provider?

In March 2021, 56 percent of Americans used a buy-now-pay-later service.

By comparison, in July 2020 that figure was 38 percent.

Yep, the BNPL market is growing that fast.

But not all BNPL providers are created equal

Some companies appeal to Gen Zs while others appeal to professionals and to older audiences that have more disposable income.

As a company, which one do you pick?

BrandTotal may be able to help you decide.

They have analyzed thousands of paid social media campaigns from three major BNPL providers:

  • Klarna
  • Affirm
  • Afterpay

Here are some highlights from their analysis:

Klarna targets Gen Z

50 percent of Klarna ads were seen by people aged 18-24.

Affirm targets professional millennials

They spent a massive 64 percent of their budget on Twitter and LinkedIn.

However, only 11 percent was spent on Facebook and Instagram.

Afterpay is focusing on Facebook and older adults

Afterpay spent 53 percent of its ad budget on Facebook, and 78 percent of its target audience is over 35.

So maybe Klarna isn’t the best BNPL choice for selling expensive suits to professionals with high levels of professional income.

Similarly, if you sell expensive backpacks to TikTokers, they might not be that familiar with Afterpay.

So, on the general price spectrum: Afterpay ($$$) > Affirm ($$) > Klarna ($)

Top Players in Buy-Now-Pay-Later

Affirm has partnered with Amazon.

As a result, people will soon be able to buy products on Amazon in installments.

PayPal acquired Paidy, a Japanese BNPL platform, for $2.7 billion.

If you sell in the Asian market, look for some interesting BNPL news from PayPal going forward.

Square recently acquired Afterpay, a major BNPL provider, for $29 billion.

We expect Square to more tightly integrate buy-now-pay-later functionality into their platform in the near future.

Did you know…?

Approximately 20 percent of people worldwide have used buy-now, pay-later loans.

And approximately 60% plan to use them within 2 years.

BNPL and Recurring Subscriptions

It seems like buy-now-pay-later (BNPL) is becoming a de facto method of paying for everything.

Afterpay, one of the top three buy-now-pay-later providers in the United States, is now allowing customers in the US to pay in installments for subscriptions. This means, stuff like gym memberships, entertainment subscriptions, or online services.

Why this is a big deal

Most BNPL providers only support one-time purchases.

This change will shake things up, allowing you to accept payments in installments for recurring purchases as well as for digital items.

And the best thing: as long as people pay on time, they will not be charged interest fees.

Could be a win for all parties involved (which, of course, is necessary to make it become the norm).


These features will roll out in the US and Australia in early 2022.

It will also be free for customers who pay on time.

What this means for you

If you sell monthly subscriptions for physical or digital items, this can be a big deal.

Adding a BNPL payment option can increase your conversion rates anywhere from 5% to 99%+.

Microsoft Edge & BNPL

BNPL is coming to your (not-so-favorite) browser, Microsoft Edge.

Microsoft has partnered with a company called Zip to provide a BNPL option at the browser level.

How it will work

When Edge users are on a checkout page, they will notice a ‘buy now, pay later’ option with Zip.

Users can then choose to pay in four installments over the course of six weeks.

The BNPL option will only appear for purchases ranging from $35 to $1,000.

The buy-now-pay-later option will be available by default to all users in Microsoft Edge release 96.

What to expect after this gets released

We wouldn’t be surprised if Shopify/WooCommerce plugins emerge soon that detect Microsoft Edge browsers and prompt users to pay in installments.

BNPL works

Allowing people the option to “buy-now-pay-later,” on your website can boost conversion rates by 20-30%.

And we all know in e-commerce that anything with a double-digit effect is definitely worth paying attention to.

Will buy-now-pay-later end well?

Buy-now-pay-later means more consumer debt.

While debt helps stimulate demand, it’s a suppressant when it has to be paid back. You’re not only borrowing from a company, you’re borrowing from your future self.

Consumer debt – whether that’s housing, student loans, credit cards, autos, speculation on financial assets, etc. – can cause problems if allowed to get out of hand.

All companies in the buy-now-pay-later space need to remember what kind of business they’re getting into. It can be a dangerous one.

It also means consumer watchdogs and regulators are likely to become increasingly involved in the space.


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