E-Commerce Buy Now Pay Later Market Expected to Reach $57.8 Billion by 2032—Allied Market Research

According to a new report published by Allied Market Research, titled, “E-Commerce Buy Now Pay Later Market," The e-commerce buy now pay later market was valued at $4.2 billion in 2022, and is estimated to reach $57.8 billion by 2032, growing at a CAGR of 30.4% from 2023 to 2032.

The e-commerce buy now pay later (BNPL) market has seen significant growth over the years, driven by several key trends and growth factors. One major trend is the increasing in the e-commerce buy now pay later market is the growing partnership between buy now pay later providers and merchants. This allows merchants to offer BNPL options to their customers, and also allows BNPL providers to expand their reach and customer base. Furthermore, BNPL options have become more popular as a result of the expansion of mobile payments, particularly in developing nations where mobile phones are the main method of internet access.

Moreover, in order to serve these markets, BNPL companies put more and more effort into creating mobile-friendly solutions. In addition, consumers may now access buy now pay later choices more easily through e-commerce sites that incorporate them into their checkout procedures. Moreover, this has led to a rise in the use of BNPL alternatives and improved conversion rates for e-commerce platforms. These e-commerce buy now pay later market trends and growth factors thus shape the future of the e-commerce buy now pay later market and is anticipated to continue to drive growth and innovation in the coming years 

Furthermore, major market players undertake various strategies to increase competition and offer enhanced services to their customers. For instance, In June 2022, PayPal had launch PayPal pay monthly, a buy now, pay later (BNPL) product from WebBank. It allows the customers to stretch payments over a long period of time, permitting them greater flexibility and even more choices to pay for the products they want and need, according to the announcement. In addition, customers may make purchases ranging from $199 to $10,000, spreading the cost over six to two years, with the first payment due one month after purchase.

Similarly, in May 2023, Zip Co Limited expanded its global presence by acquiring two new companies: Twisto, a buy now, pay later provider in Europe, and Spotii, a UAE-based provider of deferred payment solutions. Zip is projected to expand its operations into the European market, through the acquisition of Twisto, with a focus on the Czech Republic, Slovakia, and Poland. Twisto is a leading player in the buy now, pay later market in these countries, with a customer base of over 1 million users. In addition, in December 2021 QuickFee partners with Elite Merchant Solutions to provide merchants Buy Now, Pay Later options. Elite Merchant Solutions (EMS), based in Los Angeles, is a payment processing service provider dedicated to providing small businesses with innovative payment choices, PCI compliance solutions, and prompt customer care.

Furthermore, EMS sought a buy now, pay later solution that would enable their merchants to fulfil the increased consumer demand for payment flexibility while also increasing average transaction values. Such strategies adopted by the market players increase market competition and lead to the growth of the global e-commerce buy now pay later industry. 

On the basis of end user, the millennials (26-40) segment is the highest growing segment in 2022. This is attributed to the fact millennials value convenience and financial flexibility, and buy now pay later services provide them with the ability to make purchases without upfront payments. This segment appreciates the ease of splitting payments into smaller installments, which aligns with their budgeting preferences and helps manage their cash flow effectively. The buy now pay later model caters to their desire for instant gratification while minimizing the financial burden, making it an attractive option for millennials in the E-commerce space.

However, the Gen Z (20-25) segment is predicted to be the fastest growing segment during the forecast period as Gen Z preference for flexible payment options and their inclination towards online shopping is a major factor for the growth of the segment. In addition, Gen Z individuals seek convenience and value affordability, making them more likely to opt for buy now pay later services when making online purchases. This payment model aligns with their desire for financial control and budgeting flexibility, enabling them to spread out their payments over time without the need for traditional credit cards or immediate upfront costs.  

On the basis of region, North America attained the highest growth in 2021. The BNPL market in North America has experienced significant growth in recent years, driven by several factors. One of the primary drivers of this growth is the increase in popularity of online shopping, which created a need for the easiest and most affordable payment options. Consumers pay for their online purchases with BNPL in a simple and flexible manner over time, frequently without incurring any fees or interest. In addition, the competitive landscape for BNPL providers in North America has rapidly evolved, with many new players entering the market and established providers expanding their offerings. Moreover, this competition drives innovation and lowers costs, making BNPL options more attractive to consumers.

Furthermore, the COVID-19 pandemic had accelerated the adoption of BNPL in North America. BNPL is a crucial tool for managing cash flow and avoiding high credit card interest rates as more consumers struggle with their finances. Overall, the BNPL market in North America is expected to grow over the next few years due to shifting consumer tastes and an environment of increased competition. However, Asia-Pacific is projected to be the fastest growing segment during the forecast period. This is attributed to the fact that the Asia-Pacific region has a large and growing population of internet users, particularly in countries such as China and India. This has led to a rise in e-commerce adoption and increased demand for flexible payment options like BNPL.

Furthermore, the popularity of e-commerce in the APAC area has significantly increased in recent years, with many consumers turning to online shopping for convenience and accessibility. These customers get a flexible payment option from BNPL. In addition, as incomes rise and consumer lifestyles change, there is an increase in demand for credit and financing options in the APAC region. BNPL is a popular option for consumers who want to spread the cost of purchases over time. Moreover, consumers who want to spread out the expense of products over time frequently choose BNPL. Therefore, these factors are expected to continue to drive growth in the e-commerce buy now pay later market size in the Asia-Pacific region during the forecast period.

The COVID-19 pandemic had a mixed impact on the e-commerce buy now pay later market. When the pandemic had arrive, more people turned to online shopping because brick-and-mortar stores were shut down or could only operate at a certain capacity. Customers had sought out flexible payment options to better manage their finances, which caused an increase in demand for E-commerce buy now pay later choices. As consumers had look for safer and more hygienic ways to pay, the pandemic also accelerated the shift to contactless payments. As a result, the use of BNPL options, which are built into e-commerce platforms and enable customers to make purchases without having to physically handle cash or credit cards, has increased. Therefore, the COVID-19 pandemic had a mixed impact on the E-commerce buy now pay later market. While it led to increased demand for flexible payment options, it also highlighted the need for responsible lending practices and consumer protections to ensure that consumers are not overburdened with debt.

Key Findings of the Study

• By product type, the mobile and laptops segment led the e-commerce buy now pay later market growth in terms of revenue in 2022.
• By repayment model, the automatic repayment accounted for the highest e-commerce buy now pay later market share in 2022.
• By region, North America generated the highest revenue in 2022.

The report profiles of key players operating in the E-commerce Buy now pay later market analysis such as Affirm Holdings Inc., Bread Financial, Klarna Bank, Laybuy Holdings Limited., Paypal, Payright Limited., QuickFee Group LLC., Sezzle Inc., Splitit Payments Ltd, and Zip Co Limited. These players have adopted various strategies to increase their market penetration and strengthen their position in e-commerce buy now pay later market.