BNPL: The new way of shopping

Dear Readers,

Welcome back to the Next Gen Fintech (NGF) Newsletter! In our last edition, we analyzed the top 3 alternative finance startups. Today, we will dive into the Buy Now, Pay Later (BNPL), a service that’s taken the retail and e-commerce world by storm, transforming how we make purchases. Whether you're a fintech enthusiast, investor, or just curious, this article will give you insights you can't miss.

Lets's get to it!

What Exactly is BNPL?

If you’ve ever wanted to buy something but hesitated because of the price, BNPL has probably felt like a lifeline. BNPL allows you to break up payments for a product into smaller, often interest-free installments. Instead of paying upfront, you can spread it out over weeks or months, making that shiny new gadget feel a little lighter on your bank account.

Platforms like Affirm, Klarna, and Afterpay have become household names, and for a good reason. By 2024, the BNPL market is projected to reach a whopping $109 billion, growing to $171.6 billion by 2029!

Why is BNPL So Popular?

The reasons for BNPL's rapid growth can be summed up in three words: flexibility, accessibility, and convenience. And let’s face it – these days, that’s what consumers want.

1. Flexibility: It allows people to manage big purchases without feeling the immediate financial hit. Whether it’s buying electronics, fashion, or home décor, BNPL has become the go-to option for spreading out the cost.
2. Accessibility: Even those with lower credit scores can use BNPL – something that traditional credit cards often make difficult. In fact, 23% of people with credit scores below 600 are frequent BNPL users.
3. Convenience: It’s as easy as a click at checkout, with no lengthy credit approval process. No wonder 51.8% of Millennials and 16.8% of Gen Z have jumped on the BNPL services.

The Catch: Is BNPL Too Good to Be True?

For all its perks, BNPL comes with a few risks. While it’s a lifesaver for many, 57% of users admit to spending more than they should when using BNPL. That “spread the cost” mindset can lead to buying more than we need, racking up debt along the way. It’s all too easy to let those $20 payments pile up until you realize you’ve got a mountain of repayments.

Here’s a dangerous stat : the average U.S. BNPL user owes $883 on these services. And younger generations, especially Gen Z, are finding it hard to keep up with payments

Newsletter Outlook

At NGF, we aim to keep you informed about the technological advancements driving the fintech industry. As we continue to explore these innovations, we'll dive deeper into how they are applied in real-world scenarios, shaping the future of finance.

Stay tuned for the next edition, where we will explore the most innovative fintech startups of this year!

Thank you for being a part of the NGF community. As always, your feedback is invaluable. What technologies are you most excited about? Let us know!