Buy Now, Pay Later (BNPL): Market Analysis, Overview, and Leading Companies by Use-Case

BNPL is a credit option offered at the point of sale or online checkout, allowing consumers to buy a product straight away and pay for it later through installments. There is a significant global opportunity within payments: the global opportunity is estimated at $10T by 2024 and BNPL has less than 2% penetration today.

With a forecasted 4-year CAGR of 27% I expect to see more BNPL vendors building, growing, and scaling on cloud infrastructure, like AWS.

Executive Summary: The BNPL Market

  • By 2025 BNPL leaders (Afterpay, Affirm, Klarna, PayPal) will process $650B-$1T in transactions.
  • BNPL usage growth was largest in the 18 to 24 (62% growth) and 55+ (98% growth) age groups over the past FY.
  • 36% of BNPL users use BNPL once a month or more, and 37% of U.S. shoppers have tried an installment payment service according to PYMTS data.
  • Key BNPL growth drivers include merchants shifting towards omnichannel and using BNPL to help increase conversion, basket sizes, and customer acquisition; consumer preferences shifting away from traditional credit; and an expanding set of players for vertical specific use-cases (retail, travel, healthcare, etc.).
  • BNPL has diverted $8-$10B in annual revenues away from banks, according to McKinsey’s Consumer Lending Pools data.
  • Machine learning is reshaping the accuracy and speed of underwriting and modeling consumer credit risk.

How BNPL Works

  • There are three parties in a BNPL transaction: a consumer (the borrower), a merchant, and a BNPL vendor.
  • BNPL provider performs a soft credit check on the consumer at the point of purchase.
  • When this step is completed, the customer pays the provider back in an agreed-upon series of installments for the item purchased.
  • Some BNPL services offer a fixed number of installments, others allow the customer to choose the installment plan they prefer.
  • Most plans run in the range of 3 to 12 monthly payments.
  • On the other end of the transaction, merchants typically pay the BNPL provider between 2-8% of the purchase amount, and in some cases a small per-transaction fee.

Overview of the BNPL Flywheel

  • BNPL attracts consumers as it makes it easier (i.e. credit, liquidity) to purchase items.
  • More users mean more leads to merchants.
  • With more merchants accepting BNPL, there is more quantity and variety of items for consumers to access.
  • This enables BNPL vendors to bring consumers and merchants together, creating additional value at the point of purchase. This attracts more consumers.

BNPL Applications: Online and POS Systems

  • There are two BNPL use-cases: online and point of sale (POS) systems.
  • Online: BNPL options can be added to the payment methods of your online store checkout. Online customers can then pick it as a payment method, choose a repayment plan and complete the transaction.
  • POS: Retail/brick and mortar shops can use a POS system with a BNPL option added to payment methods. The merchant can then offer this at the in-store checkout, typically through a QR code or payment link.
  • Emerging BNPL use-cases: subprime borrowers (Kafene), medical visits (Walnut), retail (Zest), & travel (Uplift).

BNPL Example Firms and How They Operate

BNPL CompanyInterest rateLate feesMarket Cap
AffirmUp to 30%None17B
Afterpay0%Up to $17 per late payment, capped at up to 25% of your initial order value.29B
Klarna0%Up to $7 (per payment)45B
Sezzle0%$10 per payment700M
Splitit0%None (though your credit card will charge late fees)200M
Zip0%Up to $21 per purchase4B

BNPL Companies & Use-Cases

CompanyUse-Case & Notes
AffirmConsumer shopping (i.e. Peleton bikes, high-end bladeless fans, etc).
AfterpayConsumer shopping
KlarnaConsumer shopping
Paypal Pay in 4Consumer shopping
PerpayConsumer shopping
SezzleConsumer shopping
SplititConsumer shopping
SunbitConsumer shopping
TwistoConsumer shopping
Flexiti FinancialConsumer shopping (acquired by US Short-Term Lending firm, Curo)
Zip PayConsumer shopping
KatapultConsumer shopping
LaybuyConsumer shopping
QuadPayRetail, Travel
PayBrightConsumer Shopping; Owned by Affirm; BNPL leader in Canada
Fly Now Pay LaterTravel
WillowFlexible and responsible payment solutions for Main Street
Hello WalnutHealthcare
Prima Health CreditHealthcare
ZestMoneyInstant financing at checkout
AmountA white-label buy-now-pay-later service for banks
KafeneBNPL for the subprime consumer
HokodoOffer trade credit to your customers
CompanyInternational Market
JungleA Philippines based consumer shopping focused solution; offered via mobile application
GravitiA Mexican buy-now-pay-later startup for appliances
DeferitAussie firm to split utility, telco, car registration or childcare bills into 4 repayments
AplazoA Mexican omnichannel buy-now-pay-later provider
AddiColombian and Brazilian buy-now-pay-later startup
KredivoIndonesian buy-now-pay-later lender
TabbyUAE buy-now-pay-later firm focused on consumer shopping
BehalfBehalf, an Israeli buy-now-pay-later startup


Adam has 10 years of experience working for various technology companies. He decided to share his experiences and passion for remote work on in order to help others work from home successfully.

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