It’s not much of a stretch to say that buy now, pay later (BNPL) is taking over the world. The second half of 2021 finds installment credit running with the big dogs of payments and retail at a pitch that few innovations can match, shaping up for a decisive holiday selling season.
Brand new data paints a glowing picture for BNPL for the balance of this year. PYMNTS 2021 Holiday Shopping Outlook: Why Convenience And Personalization Will Be Key, a Kount collaboration, surveyed nearly 3,650 consumers and found that BNPL usage is expected to nearly double this holiday season over last, rising from 1.3% in 2020 to 3% in 2021.
This is hardly unexpected given the booming popularity of BNPL, borne out by a slew of partnerships and acquisitions by market leaders since the summer. Action is so hot it’s hard to pick a place to start. Among the biggest deals is Square’s purchase of BNPL pioneer Afterpay.
“In theory, the acquisition provides both Afterpay and Square’s Cash App users with an incentive to do more business within their newly formed ecosystem, given the added credit/debit/shopping capabilities each provides to the other,” PYMNTS CEO Karen Webster wrote of the deal.
Among the giant retailers, Walmart got on the BNPL bandwagon early — in 2019 with Affirm — an arrangement that finds the Bentonville behemoth nixing its layaway plan entirely favoring Affirm’s point-of-sale financing for the upcoming holidays, as reported by Business Insider.
By no means watching from the sidelines, Amazon announced its pilot with Affirm in August.
“By partnering with Amazon we’re bringing the transparency, predictability and affordability that Affirm provides today to the millions of people who shop on Amazon.com in the U.S.,” said Affirm Senior Vice President of Sales Eric Morse.
More BNPL Tie-Ups Coming Together
Things heated up quickly as second-half 2021 kicked off with Target literally doubling down on BNPL, announcing twin deals with Affirm and Sezzle.
Target President of Financial and Retail Services Gemma Kubat said in a blog post, “We know our guests want easy and affordable payment options that work within their family’s budget. Through our partnerships with Affirm and Sezzle, Target is investing in new financial tools that make our shopping experiences more flexible and personalized to guests’ needs, right in time for the holiday season.”
With a lot riding on BNPL’s expansion for traditional credit card companies, in October Visa unveiled a new global pact with Klarna while significantly expanding use of its Visa Installments Solution. As part of that announcement Visa said it’s rolling out installments in North America with a slew of partners including Commerce Bank, i2c, ScotiaBank and Versapay, as well as HSBC, ANZ, Quest Payment Systems and others in Asia Pacific region, and elsewhere.
PYMNTS research finds that customers using BNPL often convert more, and satisfaction with the experience is a loyalty generator. Going to its roots as “alternative credit” for people ineligible for credit lines, BNPL is giving millions of consumers a second chance at credit.
The Second-Chance Consumer: How Buy Now, Pay Later Payments Create New Merchant Opportunities, a PYMNTS and Sezzle collaboration, gives a sense of what to expect from 2021 holiday BNPL usage, noting that for Black Friday 2020 “42 percent of Gen X shoppers used BNPL for clothing purchases. Retailers who want to boost their profile among an often-underserved demographic group that tends to feature enthusiastic and budget-conscious consumers may find new opportunities for consumer engagement by offering BNPL as an option at checkout.”
Major Payments Players Including Banks Want In
A semi-secret superhero of the BNPL space is PayPal, doing big numbers in installments for some time leading up to its agreement to acquire Japanese BNPL platform Paidy for $2.7 billion.
“Combining Paidy’s brand, capabilities and talented team with PayPal’s expertise, resources and global scale will create a strong foundation to accelerate our momentum in this strategically important market,” said PayPal VP and head of Japan Peter Kenevan in a release.
Bringing things full circle, Affirm crossed into card issuance in October, announcing a waitlist for its forthcoming Affirm Debit+ card product. As PYMNTS reported, “The Affirm Debit+ announcement comes the same day the company announced it is partnering with American Airlines to offer installment payments to eligible travelers to enable them to pay for flights over time.”
There’s more yet in store. The Wall Street Journal recently reported on BNPL plans underway for Capital One, Wells Fargo, Bank of America and other financial institutions (FIs.) “This is notable because essentially you have some of the largest card issuers, the largest card network in the U.S., that are moving in the direction of trying to enable some type of payment plan that mirrors what these non-bank buy now, pay later companies are offering,” per that coverage.