Insider Intelligence tees up a look at US BNPL trends and expects double user growth in 2023. Some buy now pay later leaders are exploring interest-bearing lending with bank partners, reports S&P Market Intelligence. It noted 67% of Affirm’s loans were interest-bearing. Scalapay’s CEO says opportunity is still open for well-financed BNPL operators. The US CFPB reports BNPL users are more financially vulnerable but also points out the lower cost compared to credit cards when used properly.
The NY Times highlights a stolen identity case and purchase of weapons from a BNPL provider Credova merchant. The story notes 23% of 2022 US identity theft was connected to BNPL account openings. Zilch and Yappily team up to provide BNPL credit reports. According to new research, the Latin American market is poised to grow to $50.9 billion by 2028. Dive in. The BNPL newswire is always busy.
Key trends we’re watching in BNPL
BNPL has thrived because it combines the flexibility of credit with short repayment terms, app-based shopping, and a simple user experience. It will continue its upward climb in the US this year, though growth rates will slow as the sector matures. User penetration will exceed 40% of digital buyers for the first time in 2023, with growth coming predominantly from younger users while spending will reach $94.87 billion, up 25.5% year over year—a sharp deceleration from 2022, but more than double user growth. Insider Intelligence
Buy-now, pay-later platforms turn to interest-bearing lending via bank partners
Buy-now, pay-later platforms are growingbank their appetite to offer interest-bearing loans, a traditional consumer credit segment they compete against.Relying on fees paid by merchants, instead of charging consumers interest, was one of the few financial features distinguishing BNPL from established consumer credit products, such as credit cards and POS financing. The report says 67% of Affirm’s 2022 loans were interest-bearing. S&P Global Market Intelligence
Scalapay CEO sees big shift from banks to BNPL platforms across Europe
The current plight of the buy now, pay later (BNPL) industry has been likened to the dot-com bubble of the 2000s — from skyrocketing demand and adoption and proliferation of venture capital to plummeting valuations and elusive profits. But according to Mancini, there’s still tremendous opportunity for companies that can weather the storm caused by less liquidity in the private markets, declining debt and equity investor appetite for higher interest rates. PYMNTS
BNPL customers are more financially vulnerable
Customers who use buy-now-pay-later services are often under financial strain, much like the industry itself. Customers who pay with buy-now-pay-later products also frequently “buy now and pay later” with payday loans, credit cards, pawn loans, and other high-interest financial products, signaling financial distress. CFPB found users of BNPL services had lower credit scores, fewer savings, were more likely to be delinquent on other kinds of loans, and were more likely to overdraft their bank accounts and use alternative credit products. Investopedia
A tangled tale of gun parts, identity theft and the ease of buy now, pay later
Seung Song said his identity was stolen and used to buy $5,000 worth of gun components from an online dealer using BNPL service Credova. Song is not a gun owner and never received any products. Song’s ordeal highlights a rising trend of identity theft involving the fast-growing BNPL industry, and 23% of identity theft in the US involved new BNPL account openings, according to S&P Market Intelligence. New York Times
US: Buy now pay later market looks ahead to looming regulations and neobank entry
We spent much of 2022 keeping tabs on the ballooning BNPL market that has tain Italyken the payment systems space by storm, watching it bring flexible spending options to more than 28 million new users last year. BNPL has grown into its own sector of the fintech space as the global industry received an almost $180 billion valuation before the end of 2022. Its consumer base similarly exploded, boasting 360 million users last year with a projected 150% spike by 2027 that will inflate the number of users to 900 million. Mondaq
Zilch teams with Yapily to use open banking credit scores for BNPL lending
Open banking platform Yapily and payments technology company Zilch agreed to a partnership that will provide millions of people with better access to 0% interest swift repayment credit. This is Yapily’s first project with a provider of consumer credit via BNPL. Zilch will leverage Yapily’s innovative open banking platform and expertise to deliver an even more accelerated and superior credit decisioning process responsibly at a time when it is most needed in the lending industry. Finextra
CFPB: Consumers find savings in ‘buy now, pay later’ plans
A CFPB study found people using buy now pay later plans have other credit options, but BNPL plans are cheaper than their next-best tool: Credit cards. The CFPB released the “Consumer Use of Buy Now, Pay Later” report on Mar 2. It showed 88% of BNPL users have an open credit card, compared with 75% among non-users. And most of the users have low credit scores, so if they make their payments on time, they pay zero interest, compared with an annual rate of 19% to 23% for credit cards. Credit Union Times
Buy Now, Pay Later: Why older consumers are embracing the young’s favorite form of credit
New research has found older people with higher incomes are the fastest-growing users of deferred payment schemes, mostly associated with millennials in the past. But the two generations have more in common financially than it seems at first. New research has found that the fastest-growing users of deferred payment schemes are the older generations and those with higher incomes. In the UK, more than a third (35.5%) of people said they used BNPL in the last 12 months. Sky News
Latin America Buy Now Pay Later Market Report 2023-2028
BNPL payments in the region are expected to grow by 41.1% annually to reach $16.08 billion in 2023. The BNPL payment industry in Latin America recorded strong growth over the last four quarters, supported by increased e-commerce penetration. BNPL payment adoption is expected to grow steadily, registering a CAGR of 26.0% during 2023-2028. The BNPL Gross Merchandise Value in the region will increase from US $11.4 billion in 2022 to $50.9 billion by 2028. PR Newswire