Buy Now, Pay Later Online Financial Services

How the BNPL is upending the shopping experience for business, consumers, and financial institutions

The emergence of the 2020s, marked by the disruptive impact of the COVID-19 pandemic, has not only reshaped our daily lives but also transformed the way we interact with technology and approach shopping. Economic uncertainty and fluctuations in the job market have made consumers more cautious about their spending habits. In response, businesses have forged partnerships with Buy Now, Pay Later Services (BNPL) like Klarna, Afterpay, Affirm, and the recently introduced Apple Pay Later to entice and support wary shoppers.

The Appeal of BNPL

But what makes BNPL so appealing, and how does it differ from traditional layaway or credit cards? The answer is quite simple: BNPL provides “instant, justified gratification.” Unlike layaway, where you must pay a fee and the total amount upfront before receiving the product, or with credit cards, where interest can accrue if not paid within a set timeframe, BNPL allows you to purchase items with the option of paying zero interest over time. This convenience provides shoppers with a sense of rationalization and ease in their buying decisions.
As one Twitter user aptly pointed out, “Tryna clown [people] for using Afterpay is crazy when it works exactly like a credit card without interest lol.”
Moreover, for consumers who are either intimidated by credit or unable to secure a line of credit, BNPL offers an alternative means to obtain desired products in real-time without worrying about a full balance due at the end of the month.

The Buys

Approximately two in five BNPL users are buying retail goods like clothing and accessories. However, since the start of 2023, there has been a notable uptick in the usage of BNPL services for purchasing groceries and basic necessities, both online and in brick-and-mortar stores. As consumers’ paychecks continue to dwindle, BNPL has become a lifeline for many, as humorously noted by one Twitter user: “I be yelling out ‘Klarna’ like Kobe when I’m buying something I don’t even need.”
Another user remarked, “You can get groceries on Instacart by paying over time with Klarna. That’s where many Americans are financially. Payment plans… for groceries.”

The Future of BNPL

Breaking habits can be challenging, and it appears that the BNPL trend is proving to be a resilient one. Already a $309 billion industry, BNPL is projected to grow by 25% by 2026. With the US economy showing signs of weakness, we may witness an even greater surge in BNPL usage during the holiday season, as was seen in 2022. Amazon’s Prime Day 2023 serves as a testament to this trend, with a 20% increase in BNPL usage compared to 2022. As we approach Holiday 2023, it remains to be seen whether this trend will continue to flourish or taper off. We will keep you informed as the year unfolds.