Start-ups are targeting niche areas to expand their market share in the United States BNPL industry

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Over the last four to eight quarters, the popularity of buy now, pay later (BNPL) products has surged significantly in the United States. The global pandemic and the growing need for splitting the cost of purchases over a period of time has led to widespread adoption of BNPL products such as the one offered by Klarna, Afterpay, Affirm, and PayPal in the country. Moreover, the growth in volumes for these BNPL providers has been driven in part by the boom in online shopping during the global pandemic.

Notably, deferred payment was first introduced into the fashion and beauty category. However, it started to foray into different sectors, starting from food to electronics, furniture to consumer-packaged goods with the ease of installments. The more players are entering the space, the more the competition is intensifying. With the cut throat competition among BNPL providers, fintech firms are targeting the business-to-business space instead of consumers. For instance,

• With the growing popularity of buy now, pay later loans, fintech firm Accrue is trying to capture customers with another side of the economic system that has been relatively overlooked, savings. In March 2022, amidst regulatory questioning of the BNPL sector, United States-based Accrue Savings launched its services “save now, pay later”.
• The firm particularly allows the users to earn cash rewards as they save up for purchases. Moreover, the company has already partnered with Allbirds, Casper, and SmileDirectClub and has been focusing on expanding its brand partners of products that consumers accumulate funds to buy. Consumers generally save for furniture, jewelry, travel, and automobile. It is expected that the fintech firm will partner with the brands of these products from short to medium-term perspectives.
• The customers can choose a savings bank as per their budget and link the bank accounts with Accrue. Every month customers can contribute a specific amount or create a customized plan to buy a particular product of a brand. After the target is achieved, the brands also contribute to the purchase. Most importantly, the customers need not pay any fees for this service.
• The company generates revenue through card interchange fees and performance fees from merchants. The retailers are partnering up with an intention to directly engage with their customers, and also a responsible purchasing is promoted via this payment system. Through this save now, pay later, brands are offering non-credit option payment diversity giving consumers an alternative outside of credit. Accrue is considered to be the first mover in the save now, pay later space, is injecting a responsible shopping among the consumers.
• In January 2022, the company raised US$25 million in a Series A funding round, led by venture capital giant Tiger Global for making contributions to savings more important rather than the monopolization of credit in the American capitalist system.

To know more and gain a deeper understanding of the United States BNPL market, click here.