Buy Now Pay Later Market (By Component: Platform/Solutions, Services; By Purchase Ticket Size: Small Ticket Item (Up to US$ 300), Mid Ticket Items (US$ 300 - US$ 1000), Higher Prime Segments (Above US$ 1000); By Business Model: Customer Driven, Business Driven; By Mode: Online, Offline; By Vertical: Home & Furniture, Electronics, Fashion, Others) - Global Industry Analysis, Size, Share, Growth, Trends, Regional Outlook, and Forecast 2023–2032

The global buy now pay later market size was estimated at USD 753.53 billion in 2022, and is expected to hit around USD 9,226.65 billion by 2032 with a compound annual growth rate (CAGR) of 29% during the forecast period 2023 to 2032.

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Key Takeaways:

• Among component, the platform/solution segment held the largest revenue share of 66.87% in the global buy now pay later market in 2021. The segment was valued at US$ 7,191.26 Mn in 2021 and is expected to exhibit a CAGR of 21.7% during the forecast period.
• Among purchase ticket size, the small ticket item (Up to US$ 300) segment held the largest revenue share of 43.07% in the global buy now pay later market in 2021. The segment was valued at US$ 4,631.59 Mn in 2021 and is expected to exhibit a CAGR of 21.6% during the forecast period.
• Among business model, the business driven segment held the largest revenue share of 71.41% in the global buy now pay later market in 2021. The segment was valued at US$ 7,679.88 Mn in 2021 and is expected to exhibit a CAGR of 21.4% during the forecast period.
• Among mode, the online segment held the largest revenue share of 82.14% in the global buy now pay later market in 2021. The segment was valued at US$ 8,833.64 Mn in 2021 and is expected to exhibit a CAGR of 21.9% during the forecast period.
• Among vertical, the electronics segment held the largest revenue share of 36.14% in the global buy now pay later market in 2021. The segment was valued at US$ 3,886.43 Mn in 2021 and is expected to exhibit a CAGR of 21.4% during the forecast period.
• Among region, the Asia Pacific region held the largest revenue share of 35.68% in the global buy now pay later market in 2021. The region was valued at US$ 3,837.24 Mn in 2021 and is expected to exhibit a CAGR of 22.5% during the forecast period.

Growth Factors

Buy now pay later is a sort of a short-term financing that allows people to buy everyday items like home consumer goods, electronics, and clothes. It is a point of sale (POS) installment loan mechanism that allows customers to buy things and administers the repayment.

The e-commerce enterprises, fintech companies, and even banks have begun to offer buy now pay later services to customers. This payment option is available on Amazon and Flipkart’s websites, as well as banks like ICICI bank and HDFC bank. The buy now pay later loans are also extended by a number of applications based fintech firms, including LazyPay, PayTM, Moneytap, PhonePe, and CASHe, among others. This option is now accessible for a wide range of purchases, from gadgets to fashion, as well as meal delivery, travel booking, grocery shopping, and other expenditures.

The introduction of online payment methods by people in developing countries is speeding up the growth of the buy now pay later market. The economical and convenient payment service of buy now pay later platforms, as well as the global e-commerce industry’s expansion, are the primary reasons driving the growth the global buy now pay later market.

The retailers are now offering buy now pay later options, allowing customers to acquire everyday necessities by selecting a reasonable financing plan and paying in installments rather than paying the entire cost up front. Several business owners around the world have been using the buy now pay later platform to finance huge equipment, purchase raw materials, and pay staff salaries, which is propelling the global buy now pay later market growth.

Furthermore, as a result of the surge in acceptance and adoption of buy now pay later payment technology among the young people, which provides benefits such as purchasing high-cost laptops and smartphones, paying the canteen bill, paying tuition fees, and purchasing the stationary products, the buy now pay later market is expected to grow during the forecast period.

However, the buy now pay later market’s expansion is hampered by significant late and returned payment costs. On the other hand, the buy now pay later market is likely to benefit from the surge  in demand for delayed payments for online purchases and an increase in spending on luxury goods among the elderly population.

Scope of the Buy Now Pay Later Market Report

Market Trends

Rising Integration of Artificial Intelligence (AI) Technology with Apps to Augment Growth

• Artificial intelligence (AI) and machine learning technology assist service providers in developing models in real-time and improving decision-making performance. Several players in the market are developing custom-built AI-based models to accelerate their consumer penetration in the market.
• In October 2020, Max Life Insurance, a life insurance company based in India launched buy now, pay later service for its insurance customers. The service is applicable for life and health insurance policy purchases through online purchases. The customers can buy now and pay later through an online portal.
• In February 2021, Credit Intelligence Limited, an Australian based company partnered with the Sydney-based University of Technology to enhance AI capabilities. Also, Credit Intelligence Limited acquired YOZO Finance an Australian based company, in 2020 a fintech platform, for adopting advanced technology AI for business expansion in several areas such as debt restructuring, debt collection, and debt factors in Australia and Asia.

Strategic Partnerships & Product Launches Intended to Strengthen Market Position

• The companies operating in Japan market are engaged in strategic collaboration and partnerships in order to strengthen their market position and enhance their offerings.
• For instance, in October 2020, Paidy, Inc., a Japan-based fintech startup, introduced 3-Pay, enabling consumers of its Paidy Plus service to split their purchases into three installments.
• In November 2019, Paidy Inc. entered into partnership with Amazon.com, Inc., a multinational technology company based in the U.S. The aim of the partnership was to offer buy now pay later option for Japanese consumer’s on Amazon.co.jp.
• Moreover, in October 2019, Paidy Inc. established a US$ 52 Million warehouse facility by partnering with Goldman Sachs Japan Co., Ltd.

Market Drivers

Rising Green Energy Sources Coupled with Growth of Solar Power Industry

• The increasing adoption of online payments in industries such as banking, health insurance, retail & consumer goods, and others has fueled the growth of the global buy now pay later market. According to the United Nations Conference on Trade and Development (UNCTAD) in 2020, more than 80% of global consumers have shopped online and used digital payment.
• For Instance, In Japan, fintech start-ups are increasing at a rapid rate, which will significantly increase the demand for buy now pay later systems.
• Moreover, start-ups in Japan are adopting strategies of product launches in order increase the customer base. For instance, in October 2020, Paidy Inc., a Japan-based buy now pay, later provider launched a new service enabling users of its Paidy Plus service to split their purchase into three equal monthly instalment with no added interests or fees.

Market Opportunity

Adoption of Buy Now Pay Later Pay Method in Online Shopping

• Buy now pay later (BNPL) is the most convenient and fastest form of financing. The registration process is seamless. It is conveniently available at checkout on most of the e-commerce platforms in Japan. E-commerce companies are offering buy now pay later (BNPL) as a payment option to consumers by partnering with buy now pay later platforms. The buy now pay later platform charges 2% to 7% as a commission fee to e-commerce platforms on selling products.
• Furthermore, buy now pay later (BNPL) companies such as Paidy, a start-up company, partnered with multiple companies such as CROOZ SHOPLIST, Tansu Gen (Tans Gen Main Store.), la belle vie Inc. (GLADD Inc.), and others to offer its post-payment service, a BNPL pay method, enabling the consumers to use Paidy’s post-payment service while purchasing products.

Increasing Adoption of Online Payment Method Among People

• The growing acceptance of online payment methods among people in developing countries is propelling the growth of the buy now pay later market. Mobile payments, debit cards, and credit cards are the leading digital payment technologies that provide people with numerous benefits such as lowering transaction costs and streamlining fund transfer services. The availability of high-speed internet connectivity, a surge in smartphone adoption, and increased awareness of digital payment services are all contributing to market growth.
• For instance, according to report published by Razorpay in April 2021, the Indian digital payment transaction rate in January-February-March 2021 increased by 76% as compared to same time period in 2020. Thus, an increase in the adoption of online payment method among people accelerates the market growth.

Regional Insights

North America region will generate moderate market share in 2022. The North America region is considered as one of the consumer-centric regions. In addition, there are huge number of people who use smartphone applications and internet. This is driving the growth of the global buy now pay later market in the region.

• U.S. buy now pay later market size will reach at USD 8.86 billion by 2028.
• Canada buy now pay later market will reach valuation USD 2.37 billion by 2028.  

Asia-Pacific, on the other hand, is expected to develop at the fastest rate during the forecast period. The concept of buy now pay later is quite new in the Asia-Pacific region. It has been observed that buy now pay later option is quite popular among millennial population. Furthermore, the rising internet penetration in the region is creating growth prospects for buy now pay later in the region. 

• China buy now pay later market size will hit USD 5.35 billion by 2028.
• Japan buy now pay later market size is expected to surpass around USD 3.42 billion by 2028.
• South Korea buy now pay later market size is predicted to hit arround USD 2.18 billion by 2028.
• India buy now pay later market size is expoanding around USD 2.54 billion by 2028.

Mode Insights

The online segment dominated the buy now pay later market and garnered revenue share of over 82.29% in 2022. Due to COVID-19 pandemic, the use of online sales channel is growing at a rapid pace. Thus, the concept of buy now pay later is trendy in online segment.

The offline segment is fastest growing segment of the buy now pay later market in 2022. To improve customer experience and develop their relationship with customers, many organizations around the world are focusing on giving point of sale (POS) buy now pay later financing solutions.  

Enterprise Size Insights

In 2021, the large enterprises segment accounted largest revenue share 61%. The buy now pay later solution is extensively used by large enterprises since it provides clients with a flexible and inexpensive payment option for high value items. Customers are able to the purchase more things as a result of the simplicity of shopping, which increases sales. 

The small and medium enterprises segment, on the other hand, is predicted to develop at the quickest rate in the future years. Small and medium enterprises all over the world are focusing on buy now pay later solutions to boost sales conversion rates. Furthermore, buy now pay later provides greater clarity by publicly disclosing all of its pricing and fees. Small and medium enterprises concentrate on expanding their customer base and enhancing their market position. 

End Use Insights

The fashion and garment segment dominated the buy now pay later market in 2022 and has garnered 30.74% market share. The fashion and garment industries are flourishing at a steady rate. The customers enjoy huge number of discounts on products. If the customers are provided with the option buy now pay later, it has been observed that sales of fashion and garment sectors rise on a large scale.

The consumer electronics segment is expected to drive remarkable growth over the forecast period. The consumer electronics are high range of products in the market. People prefer to buy consumer electronics with credit cards. But if consumers are given the solution of buy now pay later, then the market will boom. The reason behind is that consumers want to save compounding interest of credit cards. This will also save expense and hidden costs of consumers.  

Key Developments

The major market players are highly investing in research and development to improve the technical features of buy now pay later systems. Several strategic initiatives have been attempted by industry players, including supplying varied product ranges, joint ventures, mergers, acquisitions, and collaborations. These tactics help firms and market players to gain a stronger presence in the global buy now pay later market.

The buy now pay later market has a moderate level of fragmentation. Both consumers and businesses benefit from the buy now pay later option. Leading providers like Afterpay, Affirm Inc., and Klarna Inc. have already established themselves in the e-commerce ecosystem by growing their footprints and acquiring new consumers.

Buy now pay later is becoming a more common way for customers to make in store and online purchases. The use of this point of scale and online installment loans as a payment mechanism by a large number of retailers is creating growth prospects for buy now pay later service providers. Over the forecast period, the expanding e-commerce industry is likely to boost the buy now pay later market expansion.

Some of the prominent players in the global buy now pay later market include:

• Sezzle
• Afterpay
• Klarna Bank AB
• Laybuy Group Holdings Limited
• Quadpay
• Splitit
• Affirm Holdings Inc.
• Payl8r (Social Money Ltd.)
• PayPal Holdings Inc.
• Perpay

Segments Covered in the Report

By Component

• Platform/Solutions
• Services

By Purchase Ticket Size

• Small Ticket Item (Up to US$ 300)
• Mid Ticket Items (US$ 300 - US$ 1000)
• Higher Prime Segments (Above US$ 1000)

By Business Model

• Customer Driven
• Business Driven

By Mode

• Online
• Offline

By Vertical

• Home & Furniture
• Electronics
• Fashion
• Others

By Geography

• North America
• U.S.
• Canada
• Europe
• U.K.
• Germany
• France
• Asia-Pacific
• China
• India
• Japan
• South Korea
• Malaysia
• Philippines
• Latin America
• Brazil
• Rest of Latin America
• Middle East & Africa (MEA)
• GCC
• North Africa
• South Africa
• Rest of the Middle East & Africa