The buy now, pay later (BNPL) industry has seen significant growth in recent years, driven by consumers seeking more flexible and convenient payment options.
The global transaction volume is projected to reach $680 billion by 2025, fueled by younger consumers seeking flexible payment options and merchants aiming to boost sales.
As the e-commerce market continues to expand and consumer demand for BNPL services grows, here are some statistics and projections for the BNPL industry in 2024:
Data Sources and Methodology
This article compiles verified studies to provide a comprehensive overview of the BNPL statistics. Our research process includes:
Data Collection:
- Primary sources: Industry surveys, government databases
- Secondary sources: Academic publications, reputable industry reports
- Time frame: Data collected spans from 2022 to 2032
Key Data Providers:
Analysis Approach:
- Cross-referencing multiple sources to ensure accuracy
- Prioritizing the most recent data available
- Applying relevant analysis techniques, e.g., trend analysis, comparative analysis
Limitations:
- Market dynamics in BNPL can shift rapidly; readers should consider the publication date of this article.
We strive for accuracy and transparency in our reporting.
However, some data points may have changed since publication.
Key Takeaway
- The current global market size of the Buy Now, Pay Later (BNPL) industry is estimated to be around $378.3 billion in 2023.
- 60% of people globally have tried a BNPL service at some point.
- As of 2022, an estimated 360 million people worldwide use BNPL services.
- 66% of users express concerns about the financial risks associated with its use.
- Over 200 companies are currently offering BNPL services.
Overview of BNPL
Buy Now, Pay Later (BNPL) emerged in the mid-2010s, driven by fintech innovation and changing consumer preferences.
It refers to short-term financing that allows consumers to make purchases and pay for them in installments, often interest-free.
Since its inception, BNPL has experienced explosive growth, with the COVID-19 pandemic accelerating adoption as e-commerce surged.
Today, the BNPL industry is characterized by intense competition and rapid expansion into new markets and sectors.
Major players include Affirm, Afterpay, Klarna, and PayPal, while traditional financial institutions and tech giants like Apple are also entering the space.
Heightened regulatory attention and concerns about consumer debt continue to shape its trajectory.
The global BNPL market size exceeded $378.3 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of around 40% from 2024 to 2032 (GM Insight).
It plays a crucial role in the developing consumer finance market, making it a key area of focus for financial institutions, regulators, and consumers alike.
This growth emphasizes the increasing demand for accessible, transparent, and flexible payment solutions in today's economy.
Major Statistics
The current global market size of the Buy Now, Pay Later (BNPL) industry is estimated to be around $378.3 billion in 2023. (GM Insight)
GlobalData estimates it at $349.4 billion in 2023.
The global BNPL Market is expected to reach $532.9 billion by 2024. That's a CAGR of 56% from 2021 to 2024. (Lafferty)
It is projected to grow at a compound annual growth rate (CAGR) of around 40% from 2024 to 2032. (GM Insight)
Another source projects the market to grow at a CAGR of 21.5% from 2024 to 2030. (Globes News Wire)
The BNPL market is projected to reach $1.2 trillion by 2030. (Globes News Wire)
Another survey by Globes News Wire estimates that the BNPL market will reach $8 trillion by 2032.
As of 2022, an estimated 360 million people worldwide use BNPL services. (Juniper Research)
The user base is projected to expand dramatically, reaching over 900m by 2027. (Juniper Research)
This remarkable growth trajectory represents a staggering 157% increase over five years. (Juniper Research)
The latest data indicates that there are currently 79 million US-based BNPL users. (Exploding Topics)
60% of people globally have tried a BNPL service at some point. (C+R Research)
Gen Z leads in adoption, with usage rates projected to increase from 36.8% in 2021 to 47.4% by 2025. (Exploding Topics)
Major Trends in the BNPL Industry
39% of Gen Z, 21% of Gen X and 9% of baby boomers Planned to Use BNPL in 2023 (Exploding Topics)
The Buy Now, Pay Later (BNPL) model is seeing widespread adoption, particularly among younger consumers.
A recent survey found that 39% of Gen Zers intended to use BNPL during the 2023 holiday season, compared to only 21% of Gen Xers and 9% of baby boomers. (Exploding Topics)
This indicates a shift in consumer behavior towards flexible payment options, especially as younger generations become more financially independent.
The growing acceptance across diverse demographics underlines the potential for BNPL to become a mainstream payment method.
BNPL to Reach $80.77 Billion in Total Payment Value by the End of 2024 (Emarketers)
The BNPL market is expected to reach a total payment value of $80.77 billion in 2024, reflecting a robust growth trajectory.
This expansion is driven by increased consumer confidence and spending power post-pandemic and the growing number of retailers offering BNPL options.
The substantial market size underscores the importance of BNPL as a viable alternative to traditional credit methods, appealing to consumers seeking budget-friendly purchasing solutions.
BNPL Usage for Neccesity Purchases Rose by 434% from 2020 to 2021 (cfpb)
Initially dominated by apparel and beauty merchants, the BNPL market is diversifying.
These sectors accounted for only 58.6% of originations in 2021, down from 80.1% in 2019. (CFBP)
BNPL usage for “necessity” purchases (such as gas, groceries, and utilities) has continued to rise, up 434% from 2020 to 2021 and up a whopping 1207% from 2019 to 2020.
This diversification indicates that consumers increasingly utilize BNPL services for a broader range of purchases, including electronics and home goods.
This is important because it can expand the customer base for BNPL providers, allowing them to tap into new markets and consumer segments, thereby driving further growth.
1 in 3 UK consumers who have used BNPL say it put them into “unmanageable debt.” (Emarketers)
As the BNPL market grows, regulators concerned about consumer debt accumulation and inconsistent protections are inspecting it more closely.
A survey found that 1 in 3 UK consumers who have used BNPL say it put them into “unmanageable debt.” (Emarketers)
The US Consumer Financial Protection Bureau (CFPB) has initiated investigations into the sector, emphasizing the need for standardized credit disclosures and clearer billing dispute rights.
This is important as it may lead to regulatory changes that could reshape the BNPL industry, compelling providers to adopt more transparent practices and enhancing consumer protections.
Revenue from consumer fees has grown from 11.7% to 13.4% in the US (UNC School of Law)
Many BNPL providers are transitioning from aggressive growth strategies to focusing on profitability.
Data from the five largest BNPL companies in the United States show that the revenue from consumer fees has continued to grow in recent years from 11.7% to 13.4%. (UNC School of Law)
This shift is evident as companies like Klarna and Afterpay refine their business models, emphasizing sustainable revenue generation over sheer user acquisition.
Furthermore, it reflects a maturing BNPL market, where companies must balance growth with financial health to survive in a competitive environment.
Key Challenges Facing the BNPL Industry
66% of Users Find BNPL Risky (Payment Dive)
Despite the popularity of BNPL, 66% of users express concerns about the financial risks associated with its use. (Payment Dive)
Many consumers may underestimate their total debt due to the fragmented nature of BNPL transactions, which often do not report to credit agencies.
It points out the need for greater consumer education on responsible borrowing and the potential risks of using BNPL services for budgeting, as misuse can result in considerable financial strain.
34% of users in the US have fallen behind on one or more payments (Credit Karma)
Another challenge is the potential for rising consumer debt. BNPL services can encourage consumers, particularly younger ones, to overspend since payments are deferred.
A survey by Credit Karma found that 34% of U.S. BNPL users have missed at least one payment, leading to late fees and negatively affecting their credit scores.
This growing debt burden could pose a long-term risk to consumers and BNPL providers.
The Buy Now, Pay Later (BNPL) industry faces several key challenges that could impact its growth and sustainability. Here are the major challenges identified:
BNPL has over 200 providers globally making the market hyper competitive (Statista)
The BNPL industry is becoming increasingly competitive, with over 200 companies that offer BNPL services. (Statista)
This saturation has led to price pressure and reduced profit margins for existing providers.
Major banks and tech giants like Apple and JPMorgan Chase have entered the BNPL space, leveraging their established customer bases and resources.
This is crucial as it threatens smaller BNPL firms, which may struggle to compete with larger, more resourceful entities.
Moody's predicts that many BNPL companies may not survive independently due to these competitive pressures, leading to potential acquisitions or closures.
BNPL merchant fee is most likely to surpass 2 to 8% per transaction (Charge Back Guru)
BNPL providers generate revenue through merchant fees, typically 2% to 8% per transaction. (Charge Back Guru)
However, the current economic climate, characterized by rising interest rates and inflation, presents considerable challenges for the industry.
BNPL providers face higher operational expenses as funding costs climb, potentially squeezing their profitability.
This financial strain is already evident, with many BNPL firms reporting substantial losses.
Klarna, for example, recently posted its largest annual loss in history.
These economic pressures may ultimately force a shift in how BNPL services are structured and offered, possibly leading to renegotiations with merchants or changes in service models to maintain viability in an increasingly complex financial market.
BNPL usage can lead to an increase in spending by approximately $60 per week (NBER).
A study by the National Bureau of Economic Research found that BNPL usage can lead to an increase in overall spending by approximately $60 per week, stretching household budgets by 30%. (NBER)
A lack of financial literacy among consumers is a critical challenge facing the BNPL industry.
A survey also revealed that two-thirds of BNPL users are making questionable buying decisions, purchasing more “wants” such as jewelry and other luxury items they may not have otherwise bought. (My Short Lister)
This users do not fully understand the implications of using BNPL services, leading to potential over-reliance on these payment options.
The absence of reporting to credit agencies further complicates consumers' ability to accurately gauge their overall debt levels.
It is critical as it can result in consumers accumulating unmanageable debt, ultimately affecting their financial well-being and the reputation of BNPL providers.
Efforts to improve consumer education and transparency in lending practices are essential to mitigate this issue.
Emerging Opportunities in BNPL Market
11% of Millennials and 10% of Generation Z Patients have Utilized a BNPL Payment Plan for Healthcare Expenses (PYMNTS)
The adoption of Buy Now, Pay Later (BNPL) solutions in healthcare is growing, particularly among younger and lower-income demographics.
Research indicates that 11% of millennials and 10% of Generation Z patients have utilized a payment plan for healthcare expenses, compared to only 2% of baby boomers and seniors. (PYMNTS)
Additionally, 13% of patients living paycheck to paycheck have used BNPL options, highlighting its importance for those facing financial constraints.
This reflects a broader shift towards flexible payment solutions in healthcare, making necessary treatments more accessible to diverse populations.
44% of Credit Card Users in the US are Considering BNPL
A study by J.D. Power found that 44% of U.S. credit card customers would consider using BNPL for high-ticket purchases. (JD Power)
This rising interest indicates a shift in consumer preferences as people look for alternatives to traditional credit cards, especially for larger transactions.
It is notable that BNPL providers have the potential to capture market share from credit card issuers, particularly among younger consumers who are increasingly cautious about credit card debt.
Blockchain offers Instantaneous transactions at a cost as low as $0.01 (The Motley Fool)
Blockchain technology is transforming the Buy Now, Pay Later (BNPL) industry by enhancing efficiency and transparency.
By removing intermediaries, blockchain facilitates near-instantaneous transactions, often settling payments in seconds at minimal costs, such as $0.01 per transaction.
This rapid processing improves BNPL providers' customer satisfaction. Additionally, blockchain's decentralized ledger records each transaction transparently, enabling consumers to track their financing agreements and the origin of funds.
With BNPL accounting for about 2% of global e-commerce sales in 2021, the potential for increased transparency is significant in this growing market.
Impact on Stakeholders
Impact on Consumers
Increased Accessibility and Flexibility
The rapid growth of BNPL services has made flexible payment options more accessible to consumers.
With 360 million users globally, BNPL allows consumers to split purchases into manageable installments, often interest-free.3
This particularly appeals to younger generations, such as Millennials and Gen Z, who prefer not to use traditional credit cards due to concerns about debt accumulation and interest rates.
Potential for Debt Accumulation
However, the ease of access also comes with risks.
A study by Barclays revealed that almost a quarter (23%) of 18–34-year-old BNPL users have had to reduce their spending on essential purchases like groceries to keep up with their BNPL repayments. (Barclay)
With 10.5% of borrowers facing late fees in 2021, there is a considerable risk of financial strain, prompting calls for improved consumer education and responsible borrowing practices.
Impact on Businesses
Diversification of Customer Base
Businesses benefit from the increasing adoption of BNPL as it attracts a broader customer base.
Diversifying BNPL usage beyond apparel to sectors like healthcare and travel opens new revenue streams for merchants.
For example, companies like Affirm are partnering with healthcare providers to offer financing for medical expenses, addressing a critical need for many consumers.
Increased Sales and Average Order Values
Using BNPL can lead to higher sales and increased average order values.
The average individual order financed by BNPL rose from $121 in 2020 to $135 in 2021, indicating that consumers are more likely to make larger purchases when they can pay in installments.
This is crucial for retailers looking to enhance their sales performance in a competitive market.
Impact on Investors
Market Growth and Investment Opportunities
The BNPL market is projected to reach $80.77 billion in total payment value by 2024, presenting substantial investment opportunities.
Investors are keen on the growth potential of BNPL providers, especially as the market expands into new sectors and demographics.
Risk of Market Saturation and Competition
However, investors must also consider the risks associated with increased competition and market saturation.
With over 200 BNPL providers competing for market share, profit margins may be pressured, particularly as larger players like banks and tech companies enter the space.
The recent financial struggles of companies like Klarna, which reported its largest annual loss, indicate the volatility and challenges within the BNPL sector.
Conclusion
The rise of Buy Now, Pay Later (BNPL) services is reshaping the financial sector for stakeholders.
Consumers gain increased purchasing flexibility but face potential risks of overspending.
Conventional banks are challenged to innovate or risk obsolescence.
This shift is prompting a reassessment of lending practices industry-wide.
With BNPL's rapid adoption, particularly among younger users, we can anticipate heightened regulatory oversight and possible industry consolidation.
Future success in this field will depend on balancing protecting consumers and fostering innovation.
Companies that excel at using data to make responsible lending decisions and offer user-friendly interfaces are likely to lead the growing alternative finance market.
BNPL Frequently Asked Questions
Who is the leader of BNPL?
- Klarna is frequently mentioned as a leading global BNPL provider, boasting millions of users and partnerships with numerous retailers. It is also described as the largest BNPL company based on the number of consumers and retailers using its services.
- Afterpay, with Affirm and Zip, is recognized as one of the "big four" global BNPL providers, each with a large user base.
- Affirm is another prominent BNPL company, especially in the U.S. market. It is mentioned as one of the major BNPL players partnering with large retailers like Apple, Amazon, Walmart, and Target.
- Zip (formerly known as QuadPay) is also highlighted as a leader in the BNPL space, offering payment options for major retail giants.
What percentage of Americans use BNPL?
Recent statistics show that adopting Buy Now, Pay Later (BNPL) services in the United States is widespread.:
- Around 1 in 5 BNPL users live in the US, which translates to approximately 79 million US-based BNPL users as of 2022, an increase of 56.1% over the previous year. (Exploding Topics)
- In 2023, about 50% of US consumers reported using BNPL services, up from 37.7% in 2020. (E Marketer)
- Adoption rates among Gen Z in the US are expected to increase from 36.8% in 2021 to 47.4% by 2025, while 32.6% of Gen X and 15.3% of baby boomers are projected to use BNPL in 2024. (Exploding Topics)
Using Buy Now, Pay Later (BNPL) services can have several notable drawbacks that consumers should consider:
Why you shouldn't use BNPL?
Risk of Overspending and Debt Accumulation
BNPL services can lead to overspending, as consumers may focus solely on manageable payment amounts rather than the total cost of their purchases.
This can result in accumulating debt, especially if multiple purchases are financed simultaneously, making it challenging to keep track of total financial obligations.
Fees and Interest Charges
Missing a payment can result in late fees or interest charges, which can quickly add up.
If payments are not made, accounts may be sent to collection agencies, potentially damaging the consumer's credit score.
Potential for Overdrafts
Automatic payments scheduled through BNPL can increase the risk of overdrafts in consumers' bank accounts.
If consumers do not keep track of their payment schedules, they may incur additional fees from their banks.
Loss of Rewards and Benefits
Using BNPL instead of credit cards means consumers may miss out on rewards programs and other benefits typically offered by credit cards, such as purchase protection and cashback incentives.
Lack of Understanding
Many consumers do not fully understand the terms and conditions of BNPL agreements, which can lead to missed payments and unexpected financial strain.
A survey indicated that 34% of BNPL users have fallen behind on payments, highlighting the need for better consumer education.
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