Roughly 1.5 billion consumers will spend $995 billion through buy now, pay later (BNPL) services by 2026. That amounts to an eye-popping 274 percent growth from the $266 billion that today’s 340 million consumers around the globe are expected to spend this year. Is your independent software vendor (ISV) or value-added reseller (VAR) business keeping up with one of the hottest trends in commerce?
What is BNPL?
BNPL platforms from fintech giants like Klarna, Afterpay, Affirm and even PayPal are growing in popularity. Budget-minded consumers like the fact that BNPL allows them to get their purchase right away even though they only pay a fraction of the cost upfront. A typical scheme splits the cost into four equal, interest-free installments over six weeks with one-quarter due at checkout – this is why some people refer to these services as “point of sale” loans.

Instant gratification is just one reason consumers are drawn to BNPL. People who don’t want to trigger credit checks appreciate that they can be approved for BNPL funds without hurting their credit scores. Additionally, the approval process is virtually instantaneous, and a consumer can start spending right away — no need to wait for a physical card to arrive by mail.
There is a downside, however. Failed payments carry consequences. For example, consumers might be banned from additional BNPL purchases if they don’t settle up on time.
How Many People Are Using BNPL?
For now, credit cards are still more popular payment choices, but BNPL is quickly gaining ground. According to Motley Fool, 55.8 percent of consumers have used a BNPL service, nearly 50 percent more than last year. Additionally, 62 percent believe it could render credit cards obsolete.
Don’t miss the fact that BNPL isn’t just for younger, lower-income consumers, although 18-to-24-year-olds represent a big fraction of users. Those 55 and older are also discovering the benefits. This group represents the highest growth demographic in Motley Fool’s survey. Also, the pandemic’s effect on finances has impacted BNPL adoption. More than 40 percent agree it’s a good way to build up rainy-day reserves, and for one-fourth of consumers in the survey, BNPL helps them manage purchases amid job losses and shrinking income.
Adding Value to the Solutions You Provide
In addition to meeting consumer expectations, integrating your solution with a payments platform that supports BNPL services will deliver additional value. Giving consumers the ability to buy now and pay later, merchants can expect a boost in sales.
Merchants that use BNPL may also see fewer abandoned e-commerce shopping carts (retail averages 75.8 percent), as paying later allows consumers to afford purchases that might be beyond their budget if they had to pay in full now.
While there are some risks, BNPL providers do their due diligence before approving a consumer to use the service, leveraging analytics, sophisticated risk scores and automated decision tools to determine who’s approved and how much they can spend.
With your merchants pressed to keep up with omnichannel and payment trends, offering a BNPL solution gives them another tool that can make their business more attractive to consumers looking for a modern commerce experience. And, according to predictions based on the Juniper research, it will be mainstream in just a few years. Make sure you enable BNPL for your clients by partnering with a payments platform that supports this service.