Rockville MD, February 28, 2023— In its just released research report,
Buy Now, Pay Later: Point of Sale Installment Loans in the U.S. Market and International Perspectives, 3rd Edition, Packaged Facts forecasts that three categories of BNPL consumer financing will total $483 billion by 2026, up from $210 billion in 2022.
The adaptability and resilience of the Buy Now, Pay Later (BNPL) industry has confounded naysayers on Wall Street, in traditional banks and finance companies, and within the credit card industry.
In 2020, many assumed this still-nascent industry built on short-term, smaller-dollar installment loans would be unable to survive the economic turmoil of the pandemic. The thinking was that BNPL lenders were too green to predict consumer repayment patterns or that they couldn’t partner with enough retailers at a time the retail industry was chaotic.
In 2021, they doubted BNPL borrowers would repay their installment loans as consumers dealt with rising rents (up 19.3% in December 2021 YoY) and declining real wages (down 2.4% in 2021).
In 2022, the naysayers had a lot to point at - principally, a confluence of geopolitical instability, inflation, interest rate hikes, supply chain glitches, shortages in global food supplies and rising energy prices. Elizabeth Rowe, the senior financial services analyst authoring the report, notes that in each of these years, the BNPL industry has deftly handled each of these iterative challenges while minimizing delinquencies and charge-offs and growing lending volumes.
Buy Now, Pay Later (BNPL) installment loans were designed as no-interest or low-interest options for consumers to more easily budget for payments meted out over six weeks, with the first payment made at time of purchase and subsequent equal payments made fortnightly.
As consumers have demonstrated an appetite for installment loans for a wide-range of products (home repairs to groceries), for a broad range of price points ($50 to $40,000) and for a variety of pricing models (no interest or with interest or with fees collected with each payment), BNPL providers had demonstrated a willingness to innovate and to partner with traditional financial services companies to create product line extensions, rewards programs and to extend offers to less credit-worthy consumers.
The new market research report offers financial services firms, merchant consortia, retail trade groups and fintech payments industry participants a deeply detailed analysis of the opportunities and challenges confronting extant and new participants in the BNPL sector. It examines macro and micro drivers of transaction volume, repayment rates and government interventions that may seriously damage this still young category.
Additionally, the report reviews current U.S. consumer borrowing behaviors; strategic positioning initiatives by fintechs (financial technology companies) as well as traditional consumer credit industry participants, including banks, credit card issuers and the credit/debit card networks.
The report also analyzes each of the principal business models in the industry, examining the potential viability of each model as more competitors emerge and bring their own marketing messages, merchant partnerships and revenue models.
The report provides U.S. BNPL market size estimates for 2016 vs. 2021, as well as year-by-year forecasts through 2026. These projections reflect the swift and durable changes in consumer payment preferences during and post pandemic, the efforts by global governments to regulate the BNPL industry as well as macro-U.S. economic and more granular household spending and demographic detail. While focusing on the BNPL installment loan industry in the U.S., this report also covers the wider context on BNPL financing in Asian, European, and Latin American countries.
About Packaged Facts
Packaged Facts, a division of MarketResearch.com, publishes market intelligence on a wide range of consumer market topics including retail financial services, consumer goods and retailing, and pet products and services. With an expertise in consumer demographics and shopper insights, Packaged Facts also offers a full range of custom research services. Reports can be purchased at our company website and are also available through MarketResearch.com.
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