BNPL stands for “buy now, pay later.” It is a payment option that allows consumers to purchase goods and services and spread the cost of the purchase over some time, typically in interest-free installments.
The consumer pays the first installment at the time of sale and then pays off the remaining balance in several installments over a set time period, usually ranging from a few weeks to several months.
As the popularity of BNPL continues to grow, the question on many people’s minds is: what does the future of BNPL look like?
As BNPL continues to gain popularity, there will likely be increased scrutiny and regulation from government bodies. In fact, some countries have already implemented regulations on BNPL services.
For example, in the UK, the Financial Conduct Authority (FCA) has introduced new regulations requiring BNPL providers to conduct affordability checks on customers and ensure they are not lending more than they can afford to repay.
These regulations are intended to protect consumers from debt and ensure that BNPL services operate responsibly and ethically. As more countries follow suit, we can expect greater accountability and transparency from BNPL providers.
Expansion into New Markets
With BNPL’s continued growth, we expect more providers to expand into new markets to meet the increased demand. BNPL services have already been successful in the retail sector, but we may see them expanding into other industries, such as healthcare, travel, and education.
For example, some healthcare providers already offer BNPL services for expensive medical procedures, such as dental implants or cosmetic surgery. This allows patients to spread the cost of their treatment over a more extended period, making it more affordable and accessible.
Similarly, BNPL services could help students finance their education, allowing them to pay tuition fees and other expenses in installments. This could make education more accessible to people who might not otherwise be able to afford it.
Integration With Digital Wallets
As more consumers use digital wallets to purchase, BNPL services will likely be integrated into these platforms. This will make it easier for consumers to use BNPL services without going through a separate application process.
For example, PayPal has already introduced a BNPL service that allows users to make purchases and spread the cost over four interest-free payments. This service is integrated into the PayPal app, making it easy for users to use when purchasing.
Collaboration With Merchants
With the growth of BNPL services, we can also expect greater collaboration between providers and merchants as they adapt to the influx of new customers. Merchants will benefit from offering BNPL services to their customers, as it can increase sales and customer loyalty.
BNPL providers will benefit from partnering with merchants, giving them access to a broader customer base. This could lead to more innovative and flexible BNPL services that are tailored to the needs of specific industries and customer groups.
According to a report by Allied Market Research, the global BNPL market is expected to reach $18.6 billion by 2027, growing at a compound annual growth rate (CAGR) of 23.4% from 2020 to 2027.
This growth is driven by several factors, including the convenience and flexibility of BNPL services, the rise of e-commerce, and the increasing popularity of digital payments.