GVR Report cover Buy Now Pay Later Market Size, Share & Trends Report

Buy Now Pay Later Market Size, Share & Trends Analysis Report By Channel (Online, POS), By Enterprise Size, By End Use (Fashion & Garment, Consumer Electronics, Healthcare), By Region, And Segment Forecasts, 2021 - 2028

  • Published Date: Aug, 2021
  • Base Year for Estimate: 2020
  • Report ID: GVR-4-68039-499-7
  • Format: Electronic (PDF)
  • Historical Data: 2017 - 2019
  • Number of Pages: 140

Report Overview

The global buy now pay later market size was valued at USD 4.07 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 22.4% from 2021 to 2028. Buy Now Pay Later (BNPL) is a payment option that allows customers to make purchases online and at stores without having to pay the complete amount upfront. The increasing awareness about installment-based payment methods is expected to propel the market growth. Moreover, the absence of interest fees charged by BNPL platforms is further expected to create growth opportunities for the market. Generally, BNPL requires lesser comprehensive credit checks compared to other types of retail financing. As such, customers with limited or low credit who are ineligible for traditional lending options find BNPL more appealing. Nowadays, the use of buy now pay later solutions for shopping has particularly increased among millennials and Gen Z customers. Since these customers look for convenient budgeting tools, BNPL solutions help them to easily meet their budget needs.

U.S. buy now pay later market size, by channel, 2018 - 2028 (USD Million)

BNPL solutions offer a simplified checkout process, fixed payment schedule, zero-interest, and fast approval options to customers looking to make purchases. These solutions also allow customers to spend more than they can with other payment methods. According to a survey of 6,500 adults conducted by Cardify in 2020, around 44% of customers said that BNPL solutions play an important role in determining how much they spend over the holidays. Moreover, around 48% of customers said that BNPL solutions allow them to spend 10% to 20% more than they would by their credit card.

According to a survey conducted by the Mercator Advisory Group of over 3,000 U.S. adults in the first half of 2021, around 52% of customers aged 18-24 had used BNPL solutions in the past 12 months. BNPL is becoming popular among the younger population that often has fewer resources to finance their purchases. Furthermore, it is widely used by online shoppers more often than in-store shoppers.

However, high late fees charged by buy now pay later service providers are expected to hinder the market growth over the forecast period. Moreover, credit providers and banks that offer BNPL services place charges on both the merchant and the customer. In comparison to traditional payment methods, BNPL platforms incur higher fees, generally ranging from 2% to 6% of the amount purchased. Additionally, the integration of the BNPL mode of payment into the shop’s checkout process requires technology and specialized tools, which can add up to the expense incurred by the merchant.

COVID-19 Impact Analysis

The COVID-19 pandemic is expected to have a positive impact on the buy now pay later market. With the crisis limiting household incomes across the globe, the search for liquidity has been elevated and is expected to continue so throughout 2021. Moreover, banks are often deterred from providing credit in challenging economic environments. In such cases, BNPL solutions help customers in paying their bills in installments. As a result, BNPL transactions have significantly increased during the COVID-19 pandemic.

Channel Insights

The online segment dominated the market in 2020 and accounted for over 63.0% share of the global revenue. Numerous businesses across the globe are expected to focus on adopting the fastest-growing online payment methods, such as buy now pay later, as part of their post-pandemic resurgence plans. An increasing shift in consumer mindset about the payment methods during the COVID-19 pandemic is expected to drive the growth of the online segment. BNPL solutions offer monthly or bi-weekly payments to enable easy purchases that are paid over a period of time.

The POS segment is anticipated to witness significant growth over the forecast period. Numerous businesses across the globe are focusing on providing Point-of-Sale (POS) BNPL financing options to enhance customer experience and strengthen their relationship with customers. Moreover, businesses offer customers loyalty-driven transparent POS installment loan programs. As a result, businesses are experiencing larger shares of repeat customers.

Enterprise Size Insights

The large enterprises segment dominated the market in 2020 and accounted for over 61.0% of the global revenue. Large enterprises are widely adopting the buy now pay later payment solution as it offers customers a flexible and affordable payment method for purchasing high-value products. The ease of shopping also enables customers to purchase more products, thereby driving the sales. Thus, BNPL helps large enterprises in significantly improving customer experience.

The small and medium enterprises segment is expected to register the fastest growth over the forecast period. Small and medium enterprises across the globe are focusing on adopting BNPL solutions to increase sales conversion rates. Moreover, BNPL offers increased transparency by displaying all its rates, payment schedules, and fees. Small and medium enterprises focus on increasing their customer base and strengthening their position in the market. Adopting BNPL solutions enables them to gain a competitive edge. As a result, the adoption of buy now pay later solutions is expected to witness a rise among small and medium enterprises.

End-use Insights

11The fashion and garment segment dominated the market in 2020 and accounted for over 43.0% of the global revenue. The industry is witnessing increased adoption of buy now pay later solutions as they allow customers to easily distribute the cost of the purchase over a time of pre-determined and interest-free payments. The solutions enable them to lower the purchase barriers without having to discount their merchandise.

Global buy now pay later market share, by end use, 2020 (%)

The consumer electronics segment is anticipated to register a promising CAGR over the forecast period. The industry is witnessing an increasing adoption of BNPL payment methods as they offer a low-friction substitute to credit cards. Moreover, customers prefer BNPL payment methods in comparison to credit cards to avoid expensive compounding interest and hidden fees. Increasing awareness among consumer electronic providers about the flexible BNPL payment method is expected to drive the demand for buy now pay later services over the forecast period.

Regional Insights

North America dominated the BNPL market in 2020 and accounted for over 30.0% of the global revenue. The regional market growth can be attributed to the presence of a large number of prominent players in the region. Moreover, the high number of internet users in the region is further expected to create growth opportunities for the market. In recent years, numerous customers in the region have been using online payment through digital wallets, buy now pay later platforms, and debit/credit cards owing to the various benefits it offers, such as discounts on bills and cashbacks.

Asia Pacific is anticipated to record the highest CAGR over the forecast period. BNPL trend is becoming popular across the region as it enables customers to access credit and defer payments. Moreover, the increase in uptake of BNPL solutions across the region has been fueled by millennial and Gen Z shoppers. The growing mobile internet penetration in the region is further expected to create growth opportunities for the regional market over the forecast period.

Key Companies & Market Share Insights

The market is moderately fragmented in nature. Buy now pay later is a useful service for both customers and merchants. Prominent providers such as Afterpay, Affirm, Inc., and Klarna Inc. have already paved their way toward the e-commerce ecosystem by expanding their footprints and acquiring new customers. According to Bank of America Corporation, the market for these BNPL payment apps is expected to grow 10-15 times by 2025.

BNPL is becoming an increasingly popular method for customers to make purchases in-stores and online. A high number of retailers is focusing on accepting these point-of-sale and online installment loans as a payment method, thereby creating growth opportunities for the BNPL solution providers. The growing e-commerce industry is further expected to drive market growth over the forecast period. Some of the prominent players operating in the global buy now pay later market are:

  • Afterpay

  • PayPal Holdings, Inc.

  • Affirm, Inc.

  • Klarna Inc.

  • Splitit

  • Sezzle

  • Perpay Inc.

  • Openpay

  • Quadpay, Inc.

  • LatitudePay

Buy Now Pay Later Market Report Scope

Report Attribute

Details

Market size value in 2021

USD 4.95 billion

Revenue forecast in 2028

USD 20.40 billion

Growth rate

CAGR of 22.4% from 2021 to 2028

Base year of estimation

2020

Historical data

2017 - 2019

Forecast period

2021 - 2028

Quantitative units

Revenue in USD million and CAGR from 2021 to 2028

Report coverage

Revenue forecast, company market share, competitive landscape, growth factors, and trends

Segments covered

Channel, enterprise size, end use, region

Regional scope

North America; Europe; Asia Pacific; Latin America; MEA

Country scope

U.S.; Canada; Germany; U.K.; Sweden; China; India; Japan; Australia; Brazil

Key companies profiled

Afterpay; PayPal Holdings, Inc.; Affirm, Inc.; Klarna Inc.; Splitit; Sezzle; Perpay Inc.; Openpay; Quadpay, Inc.; LatitudePay

Customization scope

Free report customization (equivalent up to 8 analysts working days) with purchase. Addition or alteration to country, regional & segment scope

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Segments Covered in the Report

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2028. For this study, Grand View Research has segmented the global buy now pay later market based on channel, enterprise size, end use, and region:

  • Channel Outlook (Revenue, USD Million, 2017 - 2028)

    • Online

    • POS

  • Enterprise Size Outlook (Revenue, USD Million, 2017 - 2028)

    • Large Enterprises

    • Small & Medium Enterprises

  • End-use Outlook (Revenue, USD Million, 2017 - 2028)

    • Consumer Electronics

    • Fashion & Garment

    • Healthcare

    • Leisure & Entertainment

    • Retail

    • Others

  • Regional Outlook (Revenue, USD Million, 2017 - 2028)

    • North America

      • U.S.

      • Canada

    • Europe

      • Germany

      • U.K.

      • Sweden

    • Asia Pacific

      • China

      • India

      • Japan

      • Australia

    • Latin America

      • Brazil

    • Middle East & Africa

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