For confirmation that buy now, pay later (BNPL) has arrived, so to speak, and as a payments choice is rapidly cementing its place with consumers, one need only look to the recent spate of earnings announcements, and details disclosed by firms on the cusp of going public.
The proof is in the numbers, of course — in the sheer number of transactions, in the revenue growth, and in the estimates, in some cases, of just how much gross merchandise volume (GMV) will soar in the coming months.
In the most recent earnings announcement, on Thursday (Sept. 9), Affirm noted that its revenues surged by 71 percent year on year in its fiscal fourth quarter, to $262 million. And its revenue guidance for the current quarter, at $240 million to $250 million, blew past in-place Street estimates of $233 million. Gross merchandise value grew by more than 100 percent to $2.5 billion in the period.
As to the way BNPL is being received: active customer count nearly doubled to 7.1 million. Repeat behavior also was in evidence: transactions per active customer in the period stood at 2.3, up 8 percent year on year.
Awareness and Adoption
Certainly the awareness of, and the interest in, BNPL is ascendant. In The Second-Chance Consumer: How Buy Now, Pay Later Payments Create New Merchant Opportunities, a PYMNTS and Sezzle collaboration, 7,024 American consumers across a wide range of demographics offered insight into the appeal. We estimate that at least 29 million consumers have used BNPL to pay for at least one purchase in the past 12 months. Roughly three-quarters of “second chance” consumers (23 percent of the overall tally) want access to the affordability that staggered, monthly payments give them.
Elsewhere, Afterpay is being acquired by Square, of course, and Afterpay’s own most recent results have shown double-digit growth, as top lines surged 78 percent year over year in the most recent period. Active customers ramped up by 63 percent during the same period, which was outpaced, in particular, in the U.S., where that growth was 88 percent. Active merchants gained 77 percent.
Klarna is reportedly on the verge of going public and its own numbers have been eye-popping, in terms of growth.
Learn more: Klarna Might Consider IPO As Soon As Next Year
Klarna reported that gross merchandise volume had grown by over $8 billion in the past year with app installations were up 115 percent and cumulative app downloads stood at 36 million. In the U.S., the cumulative app downloads stand at 13 million, representing a CAGR of 236 percent as measured from 2018 to 2021. U.S. volumes, the company has said, are up 334 percent.
PayPal offers further evidence that the BNPL space is heating up.
As reported this week, PayPal is acquiring Japan’s buy now, pay later payments platform Paidy for roughly $2.7 billion. PayPal has said in past earnings reports that its BNPL offering, in general, can help merchants boost shopping cart conversions by 39 percent and 7 million consumers have transacted more than 20 million times with BNPL (and with $1.5 billion TPV in the second quarter alone).