Buy Now, Pay Later: Point of Sale Installment Loans in the U.S. Market and International Perspectives, 3rd Edition

The adaptability and resilience of the Buy Now, Pay Later (BNPL) industry has confounded naysayers on Wall Street, in traditional banks and finance companies, and within the credit card segment.

In 2020, many assumed this still-nascent industry built on short-term, smaller-dollar installment loans would be unable to survive the economic turmoil of the pandemic. The thinking was that BNPL lenders were too green to predict consumer repayment patterns or that they couldn’t partner with enough retailers at a time the retail industry was chaotic.

They doubted BNPL borrowers would repay their installment loans in 2021 as consumers dealt with rising rents (up 19.3% in December 2021 YoY) and declining real wages (down 2.4% in 2021). In 2022, the naysayers had a lot to point at - principally, a confluence of geopolitical instability, inflation, supply chain glitches, shortages in global food supplies and rising energy prices. In each year, the BNPL industry has continued to grow and to manage delinquencies and charge-offs.

Buy Now, Pay Later (BNPL) installment loans were designed as no-interest or low-interest options for consumers to more easily budget for payments meted out over six weeks, with the first payment made at time of purchase and subsequent equal payments made fortnightly.

As consumers have demonstrated an appetite for installment loans for a wide-range of products (home repairs to groceries), for a broad range of price points ($50 to $40,000) and for a variety of pricing models (no interest or with interest or with fees collected with each payment), BNPL providers had demonstrated a willingness to innovate and to partner with traditional financial services companies to create product line extensions, rewards programs and to extend offers to less credit-worthy consumers.

The ever wider adoption of BNPL has poached billions of dollars from credit card issuers as consumers have chosen to finance purchases with zero/lower interest rate, fixed-term installment loans offered by fintechs rather than risk incurring a revolving balance on their their high-interest credit cards. Despite some repayments being made by credit card, which earns the credit card issuer interchange income, 89% of loan repayments were made on a debit card in 2021, virtually unchanged from each of the previous two years.

The Buy Now, Pay Later: Point of Sale Installment Loans in the U.S. Market and International Perspectives, 3rd Edition market research report presents a deeply detailed analysis of the opportunities and challenges confronting extant and new participants in the BNPL sector. It examines macro and micro drivers of transaction volume, repayment rates and government interventions that may seriously damage this still young category.

Additionally, the report reviews current U.S. consumer borrowing behaviors; strategic positioning initiatives by fintechs (financial technology companies) as well as traditional consumer credit industry participants, including banks, credit card issuers and the credit/debit card networks.

The report also analyzes each of the principal business models in the industry, examining the potential viability of each model as more competitors emerge and bring their own marketing messages, merchant partnerships and revenue models.

The report provides U.S. BNPL market size estimates for 2016 vs. 2021, as well as year-by-year forecasts through 2026. These projections reflect the swift and durable changes in consumer payment preferences during and post pandemic, the efforts by global governments to regulate the BNPL industry as well as macro-U.S. economic and more granular household spending and demographic detail. While focusing on the BNPL installment loan industry in the U.S., this report also covers the wider context on BNPL financing in Asian, European, and Latin American countries.