BNPL or Buy Now, Pay Later providers, including Klarna, AfterPay, and Affirm, have generated a lot of press recently. This is because consumers have started looking for innovative ways to ensure that it is easier to purchase products or services, and they wish to purchase products or services they want without incurring additional credit card debt.

Buy Now, Pay Later to Reach $100 Billion.

It is estimated that the total number of Gen Z individuals in the United States alone that use BNPL has increased around six times –from 6 percent in 2019 to 36 percent in 2021. The overall use of BNPL by Millenials has also doubled since 2019 to reach as much as 41 percent, and adoption by Gen Z has almost tripled.

It is estimated that consumers will ensure around $100 billion in the field of retail purchases with the help of BNPL programs in 2021. It has increased from $20 billion in 2019 to reach around $24 billion in 2021.

Buy Now, Pay Later Changing the Customer Experience

Observers and industry experts say that BNPL is here to stay. However, it is an old perspective. BNPL, also referred to as POSF or Point-of-sale Financing and installment payments, has been around the corner for longer, as put forth by some industry experts.

Conventionally, installment payments, BNPL, or POSF were the options only available by the end of the customer’s journey. However, in modern times, BNPL is capable of influencing the overall choices of consumers concerning the providers and products quite early in the consumer’s journey.

Buy Now, Pay Later: Where Does It Go From Here?

In the coming times, it is expected that:

• BNPL Becoming Shopping Destinations: For instance, Afterpay announced that it would be enabling the merchant partners to ensure advertisement on the BNPL apps for boosting the overall products, promotions, and offers. Brands will be capable of choosing the products they wish to promote with the help of sponsored listing formats while paying only when the shopper will be engaging with the ad.

• Boosting the Sales Attribution Factor: BNPL providers explain that they help merchants make sales that would not have been otherwise possible. MasterCard and Visa have made similar claims about the respective credit cards. As a result, merchants of the modern era will demand precise attribution statistics.

• Specialization: BNPL partners are expected to be masters of the entire customer journey. Only a few of the merchants will be capable of achieving the same. This would ultimately result in the specialization as per the product category, and continues with BNPL providers like LoanStar Technologies, which specializes in home improvement.

The All-New Buy Now Pay Later Provider Rating

• Klarna remains at number one –just like the last time.
• At number 2, there is a tie between Afterpay and Affirm.
• At number 3, there is Zip. Earlier, the position was occupied by QuadPay.
• At Number 4, we have FuturePay in the latest ranking.
• At Number 5, there is a tie between Sezzle and Laybuy.

Standalone BNPL Providers Might Not Last Longer

Why is there a requirement of the Afterpay app by Square to enable merchants to advertise, when Square has a broader reach compared to Afterpay? The answer is that it does not. You can expect the Afterpay to get embedded while being absorbed by the Square app after completing the acquisition process.

As Afterpay is absorbed into Square, the payments will significantly be derived from within the Square network. There will no longer be the involvement of any conventional payment series. Other BNPL providers will have to come across similar ways for keeping up with the overall margin improvements as realized by Afterpay.

The same stands for Affirm and Amazon. The e-commerce giant Amazon looks forward to partnering with Affirm – rather than acquiring the firm – to test the overall impact that BNPL will have on the sales. If it turns out positive, the company will acquire Affirm or develop its BNPL capability.

However, some leading BNPL providers like Klarna will not be acquiring themselves, so maximizing the value of the BNPL (Buy Now Pay Later) scheme should be integrated with other elements of the marketing scenario.

Will Banks Deal with BNPL?

For the current scenario, most purchases related to BNPL are paid either with the help of a debit or credit card. Therefore, in the case of banks not receiving the money upfront (during the time of the transaction), they will receive the interchange fee upon the payment of the BNPL providers. However, this might not last.

Most of the merchants out there have some common traits –they will be doing anything to make the sale, and they do not prefer the interchange fees. If merchants can reduce interchange fees through purchases made from credit and debit cards to other payment forms, they will be doing what they can to ensure the same.

As BNPL providers tend to collect more data about the buying and shopping behaviors of the consumers, they will be serving as better partners to the merchants compared to the banks and other payment networks.