Buy Now Pay Later Market Intelligence

The macroeconomic environment becomes the driving force behind the growing adoption of BNPL. In Asia Pacific, buy now pay later (BNPL) options have continued to grow in popularity among consumers and merchants. Rising inflation and constrained monthly budget have led to the usage of BNPL for big-ticket products such as appliances and electronics. In India, there is growing traction for flexible payment methods among consumers in Tier II and Tier III cities. The payment method has resonated with consumers across age groups and classes and has become the default payment choice for many in the country.

In Australia, the soaring cost of living is driving the BNPL loan volumes among cash-constrained consumers. In China, Singapore, and Malaysia, the preference for BNPL has grown among consumers. Despite regulatory hiccups, BNPL spending has continued to grow in 2022 and the trend is projected to further accelerate over the next 12 months, owing to inflationary pressures and constrained monthly budgets for millions of households in the Asia Pacific region.

Valuations of big-name BNPL providers have dropped significantly over the last 12 months, due to increased competition and regulatory scrutiny. Inflation and a possible recession have softened the consumer demand for big-ticket items in 2022. However, the same macroeconomic factors are also driving the adoption of BNPL products across age groups in Europe. With elevated inflation levels, European consumers are increasingly funding purchases with credit, and as a result, the adoption of low-cost, interest-free payment solutions in the form of BNPL is recording a strong uptick.

As inflation continues to impact the disposable income of millions of Europeans, BNPL schemes are expected to foray into new product categories. From food delivery to travel and healthcare, the deferred payment ecosystem is poised to record strong growth over the next 12 months. Consequently, those firms partnering with merchants and brands across different product categories are expected to record strong growth in their gross merchandise volume from the short to medium-term perspective.

In Europe, the B2B BNPL market has emerged as the next growth driver for the deferred payment industry. Venture capital firms are betting significantly on the B2B BNPL market and expect the segment to be the real winner in the deferred payment sector. Currently, several startups are operating across Europe in the B2B BNPL space, and these startups have been raked in millions of dollars from venture capital and private equity firms in 2022. The trend is projected to further continue in 2023, as more players, including banking institutions, mark their foray into the European B2B BNPL segment.

In the Middle East and Africa region, the growing consumer trust in digital payments and e-commerce shopping is driving BNPL's gross merchandise volume. Millions of shoppers transitioned to e-commerce platforms during the peak pandemic outbreak. The combination of digital-savvy consumers along with the rising trend of online shopping and payment will keep driving the BNPL gross merchandise volume over the next 12 months.

With a large percentage of the underbanked and unbanked population, the alternative payment method in the form of BNPL is also recording strong growth in the Latin American region. Although the share of Latin Americans having a bank account has increased over the last decade, credit card penetration is still relatively low in the region. The gap created between the two has resulted in a perfect growth opportunity for BNPL providers in Latin America.