Emerging as an alternative credit payment approach, buy now, pay later (BNPL) aims to meet the need of younger consumers who often have a limited credit history and low credit scores.
The global BNPL market is expected to reach $656.34 billion by 2026 from $136.55 billion in 2021, registering exponential growth at a compound annual growth rate (CAGR) of 36.9%.
Frost & Sullivan says zero-interest fees and flexible repayment plans are vital in boosting the global BNPL market.
“The increasing use of next-generation platforms in digital and e-Commerce spaces has revamped payment methods and enabled customers to control their spending,” explained Dewi Rengganis, information & communication technology industry analyst at Frost & Sullivan.
She added that the rise of BNPL can help satisfy consumers’ demand by offering faster credit financing with zero interest fees, compared to legacy payment methods that typically charge up to a 60% annual percentage rate (APR).
“Innovative solutions, such as customer-focused apps, point of sale (POS), and merchant commerce solutions, will be essential for facilitating the widespread adoption of BNPL. Data-driven platforms are crucial for delivering customer experience and driving the market growth,” added Rengganis.
Growth opportunities
Business-to-business (B2B) credit product: B2B customers tend to make repeat purchases and have payment terms for more than 30 days. Businesses can improve their cash conversion cycle, increase revenue growth, streamline reconciliation tasks, and digitise trade-credit processes.
Omnichannel technology and data collection: A holistic customer experience can be achieved through customer data collection. Creating a partnership with artificial intelligence (AI)-driven technology providers or building in-house data warehouse systems will aid BNPL providers in producing positive omnichannel experiences and a seamless customer shopping journey.
Expansion to emerging markets: The growing awareness of the BNPL methods in under-served regions provides ample opportunities for BNPL providers to expand to emerging markets and reach a larger customer and merchant base.
