Sooner Or Later, Regulators Will Focus On Buy Now, Pay Later

The Buy Now Pay Later (BNPL) sector continues to evolve and now the techfins are ramping up the competition. Fintechs such as Klarna blazed the trail, the banks joined in and the techfins have taken up the torch. Earlier this year Apple
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launched its BNPL service in the US to compete for the more than $100 billion in purchases that Americans are making using this payment method (and I don’t doubt that my good friend Ron Shevlin was absolutely right to call it “a winner”) and now Amazon
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Pay has launched two new BNPL programs to serve different customer segments, ahead of the holiday shopping season. It not only techfins looking at this sector though: regulators are too.

BNPL Is Growing

The growth of Buy Now, Pay Later (BNPL) services in many markets is has been rapid, and the UK is now different. It is an established option for UK consumers. More than one-third of all Brits have used BNPL services (more than 19 million people), a fraction that has doubled over the last two years. The main players in the UK market (including Klarna, ClearPay, LayBuy and PayPal
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as well some of the banks) are clearly providing a service that consumers want and I personally know people who find it a convenient way to manage expenditure. It is currently the fastest-growing online payment method in the UK, with a growth rate double that of bank transfers and more than triple that of digital wallets. When it comes to online purchases, BNPL currently takes up 5% (£6.4 billion) of the UK market and is showing a 200-300% annual growth rate. It is expected to account for 10% of all UK e-commerce spending by 2024. Overall, Research and Markets estimate that the UK BNPL market will grow from around $33 billion per annum now to around $55 billion five years from now. Wow.