Young Consumers Are Choosing to Buy Now and Pay Later

One of the things youngsters like about the modern world is the liberty to manage their finances like they want to. With time, they are getting more financial liberty than before. A key offering that attracts young consumers these days is the ability to buy now and pay later. Many online retailers partner with financial services providers to let customers make purchases by making only a small upfront payment. Here we analyze why most young consumers choose to buy now and pay later.

The Analysis

According to an analysis done by SIA partners, the BPNL (buy now pay later) share of retail e-commerce and point of sale transactions in the US was less than 2% in 2021, but it will probably double to 4% by 2025.

The Major Players

As the BPNL is proving useful and wide-reaching, many brands are entering this arena. The latest on the list of new market entrants is Apple. On Monday, the tech giant announced that it would offer financing options for purchases made via Apple Pay.

The new service will be called Apple Pay Later and available in the US in the fall. There is no word yet on when this service will be available in Canada.

Understanding BNPL

BNPL is offered by many renowned providers like Klarna, Afterpay, PayBright, and Sezzle. It resembles a point of sale loan where a consumer buys an item and then chooses to pay for it via regular installments over a few weeks or months.

These services are catching the attention of financial regulators all over the world. The industry has only a few regulations currently and probably needs new ones in the near future.

Not New?

Though many people believe BNPL is a new concept, it's not. For many years, furniture stores and car dealerships have offered no-interest financing options. BPNL loans are getting more popular because they can be easily integrated with online shopping platforms and allow the consumer to finance any purchase with just one click!

The Success Story

One of Canada's BPNL service success stories is PayBright, which has partnered with over 5,700 retailers, including big names like Apple, Steven Madden, The Bay, etc., to provide six-week interest-free installment plans. The website says that PayBright has approved over $1.76 billion in consumer credits since its inception in 2009.

How Do BPNL Companies Earn?

Many people have wondered how BPNL companies earn money. Though the business models vary from one company to the next, most BPNL companies earn money by charging retailers for purchases made through their services.

A Win-Win Situation

According to Klarna, a key player in the global BPNL sector and a Swedish fintech company, consumers spend 45% more when they have the buy now pay later option. About the same percentage of people would buy using BPNL now, but they would have delayed the purchase if they didn't have access to BPNL. So, these services are a win-win for retailers and consumers.



Previous Post Next Post