The US buy now pay later market size was exhibited at USD 3.38 billion in 2023 and is predicted to hit around USD 15.94 billion by 2033 with a CAGR of 16.31% from 2024 to 2033. The U.S. buy now pay later market is driven by the improved consumer affordability and financial freedom.
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The U.S. buy now pay later market offers services while providing customers with a flexible payment alternative. With the help of financial technology, customers are viable to make purchases right away and pay for them overtime in interest-free installments. But now pay later services are becoming increasingly integrated into online shopping platforms, making it easier for customers to use these payment alternatives online.
Significant online marketplaces and retailers are collaborating with buy now pay later (BNPL) suppliers to give customers greater options at the point of sale. More established businesses are acquiring smaller startups or merging with rivals to get a more significant market share, causing the U.S. buy now pay later market to consolidate. As the industry develops, more consolidation is anticipated.
Drivers
Evolving retail landscape
Customers are looking for various payment solutions that fit their interests and financial status more and more. Because BNPL services let customers break up their payments into smaller, interest-free installments, they provide a substitute for conventional credit cards. By giving those who would not be eligible for traditional credit cards or loans access to credit, BNPL services can aid in the promotion of financial inclusion. More customers find this inclusivity appealing, which propels U.S. buy now pay later market’s growth.
Shifting consumer preferences and economic anxieties
BNPL services provide a practical substitute for traditional credit card debt as consumers grow increasingly suspicious of it and want more flexible payment choices. With these services, customers can spread out their payments over time rather than paying the entire amount once for their products. This is consistent with spending within a budget and avoiding high-interest loans. Economic uncertainties like unstable employment and income fluctuations also encourage customers to look for flexible payment options that don't put a load on their finances.
Restraints
Impact of credit score
The increased reliance on digital gadgets for business, education, and leisure, along with new product releases and technological breakthroughs, contributed to a notable spike in consumer demand for electronic goods. Electronics retailers worked with BNPL providers to smoothly include their services in the buying process so that customers may choose to pay in installments at the point of sale.
Consumer debt and affordability
A considerable amount of debt, including mortgages, credit card debt, and student loans, is already borne by many consumers. Customers may be reluctant to pay off extra debt using BNPL services due to their high level of debt. Even though BNPL services frequently promote themselves as interest-free, if payments are neglected, late fines and penalties can mount up quickly. Customers who are already in debt can be cautious about spending more money. Missed payments or defaults can have a negative impact on individuals' credit scores even if BNPL transactions might not always be reported to credit bureaus. Customers who are concerned about preserving or enhancing their creditworthiness may find this concerning.
Opportunities
Expansion of retail sector
BNPL services, which enable customers to buy and pay for products in installments, have been linked to Internet shopping. However, the industry can reach a wider audience and satisfy customers who like in-person purchasing experiences by expanding BNPL services to physical stores. Merchants can provide consumers greater flexibility and convenience by incorporating BNPL choices into their physical retail locations. This could lead to an increase in sales and customer loyalty.
Additionally, by growing their business, BNPL suppliers can stand out from the competition and forge new alliances with merchants. Furthermore, by facilitating a smooth omnichannel retail experience, delivering BNPL in-store can aid in bridging the gap between online and offline purchasing experiences.
Financial inclusion & responsible lending
BNPL providers can reach a broader range of consumers by encouraging financial inclusion. This includes individuals who might not otherwise have access to traditional credit cards or loans because of a poor credit history or low income. This increases their market potential by allowing them to contact previously underserved population segments. Stressing appropriate lending ensures that people with debt they can't afford are in good standing. Consumer trust and confidence in BNPL services are enhanced by clear and concise disclosure of fees and payback schedules, transparent conditions, and strict adherence to regulatory requirements. As a result, fewer defaults and long-term connections with clients are fostered.
The platform/solutions segment dominated the U.S. buy now pay later market in 2023. The expansion of online platforms that provide BNPL services and satisfy different customer demands and tastes. These platforms offered customers a practical and adaptable payment option at the time of sale by seamlessly integrating with brick-and-mortar retailers and e-commerce websites. The platform/solutions industry profited from technology improvements by evaluating credit risk and customizing customer payment plans using data analytics and AI-driven algorithms.
The small ticket item (Up to US$ 300) segment dominated the U.S. buy now pay later market in 2023. Convenience and affordability drove consumers to make smaller, more frequent purchases. Because BNPL allowed for interest-free payment splitting, it was a desirable choice for regular expenses. To improve the shopping experience and boost conversion rates, many physical and virtual businesses incorporated BNPL services into their checkout procedures. More clients choose this payment option because of the smooth integration of the BNPL choices.
The business-driven segment dominated the U.S. buy now pay later market in 2023. Numerous companies collaborated with BNPL suppliers to give their clients adjustable payment plans. Through these alliances, BNPL services were able to reach a broader range of sectors, including travel, e-commerce, retail, and healthcare. BNPL providers customize their products to match the unique requirements of companies, including white-label platforms, payment system integration, and customized financing choices, among other solutions. Business-to-business (B2B) transactions are now included in the services offered by BNPL providers and consumer transactions. This enabled companies to expedite the purchase process and better manage cash flow.
The online segment dominated the U.S. buy now pay later market in 2023. BNPL services flourished due to the sustained expansion of e-commerce platforms. Customers were exposed to additional BNPL alternatives at checkout as more and more shopped online. By choosing strategic partnerships with large online shops, BNPL providers could easily integrate their services into the checkout process. This increased customer accessibility and convenience and accelerated adoption.
The electronics segment dominated the U.S. buy now pay later market in 2023. The need for leisure, distant work, and technological breakthroughs increased the demand for electronics. By forming strategic alliances with large electronics retailers, BNPL providers give easy payment choices at the point of sale. When more people shopped online and looked for easy and accessible payment options, BNPL adoption for electronic purchases increased.
Segments Covered in the Report
By Component
By Purchase Ticket Size
By Business Model
By Mode
By Vertical
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