Buy Now, Pay Later (BNPL) options have gained significant traction in recent years. It is especially popular among younger consumers who are looking for more flexible payment options that fit their lifestyle.
Since BNPL allow consumers to make purchases without paying the full amount upfront, and instead lets them pay in installments over a set period, it has emerged as a popular choice with GenZ and Millennials, allowing them to purchase high-value luxury goods at zero or interest-free cost.
Check out our article about how merchants can maximise sales with Boost Connect’s BNPL here, and another one about how to select the right BNPL provider for your business here.
BNPL is expected to continue to grow in popularity in the near future, fuelled by shifting buying habits as more consumers do their shopping online. AS BNPL becomes more widely available, consumers can enjoy greater flexibility when it comes to making purchases
Here are 5 things you can expect to see for BNPL for 2023 and beyond.
- Increased Competition
BNPL is still in its early growth stages in the market. Given the extremely positive response to this option by shoppers, more companies are expected to enter the BNPL market. With it comes increased competition. Of course, increased competition in the BNPL market is a positive development for consumers, as it should lead to more options, better pricing, and improved services. However, it also lead to increased pressure on merchants and BNPL providers will find themselves in a highly dynamic and demanding environment. To differentiate themselves, merchants and BNPL providers will need to find ways to attract and retain customers, which leads us to our next point.
Increased competition is likely to drive innovation in the BNPL market. Providers will need to find ways to differentiate themselves from their competitors by offering unique features and services. Some innovations that we might expect to see in BNPL for the near future could be more flexible payment options, loyalty programmes to reward new consumers and encourage repeat business, and new market offerings. We can also expect to see BNPL becoming available for more than tangible goods.
To capture more customers, BNPL providers may offer more personalized experiences. BNPL providers could offer personalized payment plans that are tailored to the consumer’s budget and financial situation. Or they could assess an individual consumer’s purchase history to offer recommendations and payment plans for products that are more likely to appeal to them. BNPL providers can use data to understand how individual consumers prefer to communicate and offer personalized customer service through their preferred channels. BNPL providers could also offer personalized rewards and incentives to encourage consumers to use their services more frequently, based on their interests and purchasing behaviour.
If you want to know how you can boost your business with personalised incentives for your customers, check out the powerful features of Boost Connect’s e-voucher platform here.
- Regulatory Scrutiny
In the near future, we may see more regulatory oversight on BNPL providers to ensure consumer protection. According to GlobalData estimates, the BNPL market will reach US$ 596.7 billion in 2026 at a CAGR of 33.3%. The sector has been able to grow so rapidly partly due to a lack of regulation. However, governments worldwide are reviewing the sector while considering imposing rules to protect customers/borrowers. While this could hamper the exponential growth of this sector, overall this is a good development as the protections that come with regulation will give consumers more confidence to use BNPL options as a norm.
- Integration with Other Services
BNPL providers may look to integrate with other services, such as e-commerce platforms, to offer a seamless payment experience for consumers. Or, as part of innovations to raise competitiveness, they may partner with platforms outside of the popular categories. The top 3 spend categories for BNPL include clothing and footwear, electronics and electricals, and furniture. We may see BNPL expanded to encompass more goods and services such as sports & fitness equipment, travel & accommodation, media & entertainment, food & drink, and services such as healthcare or education.
Overall, it’s safe to say that we can expect to see continued growth and innovation in this space in the near future. These 5 new and rising trends within the BNPL market provide many opportunities for merchants to jump on the growth wagon, especially to attract new Millennial and Gen Z customers, get more repeat visits and convert higher average basket sizes.