[January] Citi Flex Pay, Affirm, and BNPL in 2025

Welcome to another year of Buy Now, Pay Later Insights and Innovation. We’re excited to kick off the year with a milestone announcement for credit union BNPL: over fifty credit unions in the U.S. are now providing this service to members across nearly 30 states.

Join us for an even bigger 2025.

– Jazzy Z. , editor in chief

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Industry at a Glance

2025’s Buy Now, Pay Later (BNPL) trends are here. This year, the global BNPL market size is projected to grow 48.4% from $231 billion to $343 billion, with North America as its largest market. Research and Markets explains that this significant growth is driven by:

• eCommerce growth & online shopping trends
• Consumer demand for flexible payment options
• Rise of digital wallets and mobile payments
• Increase in Millennial and Gen Z consumer base
• Competition among payment service providers?

These stats measure the growth of 3rd-party BNPL, which is in response to consumer demand for “more accessible, safe and reliable financial options”, explained Phil Goldfeder, CEO of American Fintech Council .

Meanwhile, credit union adoption of BNPL is growing, with over fifty credit unions in the U.S. now offering BNPL programs to their members. Ron Shevlin , Chief Research Officer at Cornerstone Advisors , explains that “banks and credit unions must battle back in BNPL” or face risks such as interchange loss, deposit displacement, and decrease in loan volume.?

Citi Flex Pay now available on Apple Pay

Citi Flex Pay, the BNPL program from Citi Bank, will be available to users at check out via Apple Pay starting February. Tied to the Citi credit card, Citi Flex Pay provides “the option to set up payment plans when making purchases of $75 or more through Apple Pay”. Three-month plans will be available with no fees and no interest, with additional months available with a fee. Citi Flex Pay is the latest BNPL provider to integrate with Apple Pay, which deprecated Apple Pay Later, its own BNPL feature, last year.?

BNPL is a powerful embedded feature that has a halo effect on the entire experience it becomes a part of. equipifi notes that credit unions who embed BNPL into the digital banking experience see 16 percent increase in engagement from members who use its BNPL program. Members also prefer BNPL from their credit unions when available.

Affirm Increases Loan Funding Capacity by $4B?

This month, Liberty Mutual Investments (LMI) announced its plans to invest up to $5 billion in Affirm. This investment allows LMI to “purchase Affirm’s loans on a forward flow basis”, or “before they have been originated”. Affirm’s funding capacity has grown by more than 50 percent in the last two years. This commitment from LMI will help Affirm “extend up to $20 billion in loans over the next three years”.?

Affirm claims to “own a third of the volume and more than half of the revenue in the U.S. pay later space”. It’s made significant pushes with merchant and digital wallet partnerships, financial products, and consumer facing apps to drive adoption. As a result, Affirm’s global market network has grown 20 percent YoY in 2024, in addition to launching its own debit card, called the Affirm Card.

BNPL Regulatory Expectations for 2025

The regulatory conversation for 3rd-party BNPL will continue in 2025 as the Consumer Financial Protection Bureau (CFPB) pushes for regulation of pay-in-four loans. The Financial Technology Association filed a lawsuit last October against the CFPB claiming that they are not subject to Regulation Z. This, along with the incoming administration, adds uncertainty to how the regulatory conversation for 3rd-party BNPL will go. Nevertheless, 3rd-party BNPL providers are continuing to push in the race to expand market share.

Financial institutions launching BNPL remain largely unimpacted by regulatory conversations as they already fall within the regulatory guardrails the CFPB is considering applying to 3rd-party fintechs. In fact, many credit unions launch BNPL as a way to compete with fintech providers and large banks. “We're in a hyper competitive environment with very large financial institutions all around us,” said Pierre Cardenas , President and CEO of Capitol Credit Union . “We need technology to differentiate ourselves and play bigger.”

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