Globally, buy now, pay later (BNPL) is emerging as one of the preferred modes of payment. While the global coronavirus pandemic has primarily driven the growth, changing customer behavior, and the shift to digital transactions, has also supported the growth of BNPL brands. Several BNPL companies multiplied their valuations in 2020. For instance, in December 2020, Afterpay saw an increase of more than 290%, and Sezzle experienced more than 250% growth in its valuation. According to PayNXT360 analysis, integrations with online and offline partners are expected to drive the future growth of the BNPL service providers. It is further expected that these companies are also likely to focus on niche areas to expand their markets share.
Healthcare and the automotive industry as the next growth areas for BNPL brands
With the global pandemic affecting people's daily livelihood across the world, buy now, pay later platforms are focusing on creating a solution built for everyday needs, including healthcare and the automotive industry.
For instance, the US-based BNPL platform, Sunbit, is aiming to disrupt the eyewear, dental, and elective healthcare industries through its offering. The healthcare industry can become a great growth driver for Sunbit, as families hit with the global pandemic are finding it difficult to deal with healthcare-related expenses.
In addition to healthcare, Sunbit also aims to disrupt the automotive industry. With these industries still stuck in a conventional style of financing, BNPL offering to cater to the needs of growing customer demands can become a massive growth driver for buy now, pay later brand. With the Sunbit BNPL offering already available in more than 7,000 locations, both online and offline, the flexible payment provider raised US$130 million in May 2021.
Out of 7,000 locations, Sunbit already has a presence at one in four healthcare and auto dealership services. With the recently raised funding round, the BNPL brand is planning to expand its offering to more healthcare and auto dealership service locations in the United States to boost revenue and growth.
Buy now, pay later pair up with loyalty points program
BNPL and loyalty points programs are two customer-centric business areas. Therefore, the partnership between the two services seems like a natural progression that can also boost growth for players in both segments. For instance,
In April 2021, global BNPL brand Klarna partnered with Flybuys, a loyalty points program in Australia. Under the partnership, members of Klarna’s rewards club can convert their points into Flybuys points. With Australians being avid fans of loyalty programs, Klarna is aiming to attract new users to its BNPL platform. Therefore, this partnership is expected to provide a competitive advantage to Klarna over other homegrown BNPL brands like Afterpay and Zip in Australia.
Buy now, pay later service for B2B is likely to expand growth
BNPL brands have experienced exponential growth in the business-to-consumer segment. However, the business-to-business model represents a similar growth opportunity for buy now, pay later brands.
Zip, an Australian-based BNPL offering, announced its entry into the business-to-business payments category in April 2021. Through its B2B offering, the company will allow SMEs to pay all their expenses in installments. The B2B solution known as Zip Business Trade Plus will provide SMEs with US$1000 – US$150,000 line of credit, interest-free for up to 60 days. Small and medium enterprises can use this line of credit anywhere Zip is accepted. This includes in-store and online purchases and even payment of bills and invoices.
Rather than going through traditional banking channels, SMEs can use this quicker and easier access to credit for meeting their financial needs in the short term at zero interest.
Buy now, pay later to access early payments
Apart from offering buy now, pay later services to provide easier access to credit for SMEs, BNPL can have several plays in the B2B category.
For instance, Butn, another Australian-based BNPL provider, partnered with food delivery platform Easi in February 2021. Often merchant and driver-partners of the food delivery platform have to wait for weeks to get paid. However, through this partnership with Butn, 20,000 merchants and 25,000 registered driver partners of Easi can opt for same-day payments. Therefore, allowing them to have early access to payments.
The buy now, pay later brand that offered total lending of US$166.6 million in 2020, is getting set to list on the Australian Securities Exchange in 2021.
The road ahead
PayNXT360 expects most buy now, pay later providers, including market leaders, to largely focus on niche-based integration strategy for the growth of their brands. With the world slowly but gradually moving ahead for traditional financing solutions, buy now, pay later innovative payment solution is perfectly poised to disrupt the traditional lending industry.