Buy Now, Pay Later Online Shopping [BNPL Trends]

The buy now, pay later (BNPL) service has quite literally exploded in popularity. In fact, its market size grew from $6.51 billion in 2023 to $8.42 billion in 2024.

This tendency is expected to continue, with forecasts of $23.73 billion in 2028. Taking into account these undeniable facts, it is obvious that businesses should look into adopting and implementing BNPL into their payment services.

In case you are just hearing about this, or not too familiar with the concept, don’t worry. We are here to explain.

What Is Buy Now, Pay Later Online Shopping?

As the name implies, you can buy an item now, and pay for it later. This means you can purchase a product or service and pay it over time, often in interest-free installments.

Payments are usually divided into equal installments over a set period (e.g., six payments over ten weeks). The first payment is made at the time of purchase. The rest are automatically charged to the linked debit or credit card.

It is a very easy, quick, and hassle-free way for consumers to make purchases. Typically, it only takes a few clicks, and basic information, like name, payment method, phone number, and email address to get approved.

To quote Michelle Evans, Global Head of Digital Consumer Research at Euromonitor International.

“BNPL offers an attractive alternative for consumers who are wary of traditional credit but still want the flexibility of paying over time.”

Shop Online: Buy Now Pay Later vs. Traditional Payments

BNPL is very different from traditional payments. Here are some of the main features:

1. Convenience
2. Speed
3. Interest Rates
4. Flexibility
5. Card Reporting

Convenience

BNPL services can easily be integrated into in-store checkout pages, making it really easy for users to purchase a product/service without needing to leave the checkout page. 

With traditional credit cards, customers need to manually enter their details, or use saved information, if they have already purchased from the website before.

Speed

The approval of the purchase is often instant and has lower barriers to entry. As we’ve mentioned already, most BNPL providers only require the bare minimum, in terms of information. 

On the opposite end, applying for a credit card typically requires a longer application process that involves a hard credit check, credit history, income, and so on. Basically, the entire process can take days, and even weeks depending on the issuer.

Interest Rates

More often than not, buy now, pay later services provide installments free of interest, especially for short-term repayments (e.g., four payments over six weeks). Keep in mind, however, that late fees are often charged if a customer misses a payment. 

Longer-term payment plans do involve interest rates, but they are typically disclosed upfront. As for credit cards, they usually have a revolving interest on any unpaid balance carried over after the monthly billing cycle. 

Additionally, credit cards sometimes come with other costs like annual fees, balance transfer fees, and cash advance fees. All these can add to the overall cost.

Flexibility

BNPL offers structured payments, which are divided into a few fixed installments over a short period of time. Therefore, there is less flexibility in how payments are made. Credit cards offer more flexibility in terms of how consumers want to pay each month, but this can lead to recurring debt, if not managed carefully.

Credit Reporting

Most BNPL providers do not report positive credit behavior to credit bureaus, so making your payments on time will not necessarily help build credit. Credit card usage and payment history are regularly reported to credit bureaus. 

This means that paying on time can make your credit score better, but if you don’t pay or owe too much money, it can hurt your credit score.

BNPL Trends 2024 and Beyond

1. Expansion to High Value Purchases
2. More Adoption Among Younger Consumers
3. Growing eCommerce Platform Integration
4. Government Regulations and Consumer Protection

1. Expansion to High Value Purchases

BNPL is slowly, but surely expanding into more luxurious markets and categories, like travel, electronics, home goods, etc. This is closely related to the fact that buy now pay later providers are offering higher limits, enabling these larger transactions.

For example, Affirm has partnered with Peloton and Expedia, where higher credit limits are needed to cover expensive items like exercise equipment or travel bookings.

People are looking forward to using BNPL for higher transaction purchases, and as such partnerships make it easier for consumers to afford large purchases directly at the point of sale.

2. More Adoption Among Younger Consumers

Understandably, most BNPL users are young people, aged between 18 and 44. As this type of service grows in popularity, it is expected that more and more young consumers will adopt it.

The fact is that currently, 45% of people state they use BNPL because it’s easier to make payments. Younger generations generally have shorter attention spans and want things to happen faster. 

So to no surprise, BNPL industry trends dictate a wider audience will start using the buy now pay later payment model.

As Derek Szeto, co-founder of Walnut, puts it:

“Younger consumers, especially Millennials and Gen Z, are gravitating toward BNPL services because they provide a transparent, flexible alternative to traditional credit. BNPL offers immediate purchasing power without the long-term debt traps or high-interest rates associated with credit cards, which is why we’re seeing such rapid adoption in this demographic.”

3. Growing eCommerce Platform Integration

A higher number of eCommerce platforms are integrating BNPL options right into their checkout process, in order to provide a smoother experience for their customers.

Some of the biggest BNPL service providers, like Afterpay, Klarna, Affirm, and Zip are offering this payment option so that their clients can take advantage of fast and easy shopping – just a few clicks away.

To quote Max Levchin, founder and CEO of Affirm:

“By integrating BNPL directly into eCommerce platforms, we’re providing consumers with more flexible payment options, helping them manage their finances better, and empowering retailers to drive higher conversion rates. It’s a win-win situation for both consumers and merchants, especially as more people embrace online shopping.”

4. Government Regulations and Consumer Protection

Another big change that is expected is for governments to regulate BNPL payments. This will lead to more transparency and structure in the way BNPL payments are processed.

Such regulations will ensure fair prices and customer protection. However, these new procedures will likely have a big impact on buy now pay later providers. For instance, they could enforce stricter disclosure rules, and will probably require providers to report installment plans to credit bureaus.

As Sarah Gilbert from PwC says:

“With the rapid growth of BNPL services, regulation is inevitable, but it will create a more structured and transparent market that benefits both consumers and providers.” 

Electronic Transfer Can Support Your eCommerce Growth

As you now know, buy now pay later online shopping is the future, so you should definitely think about integrating it into your eCommerce strategy if you don’t want to be left out.

Electronic Transfer has been in the industry for over 30 years. Our advanced online credit card processing services are tailored to meet the needs of every business, many with their own unique challenges.

Partnering with Electronic Transfer can help your business to successfully integrate BNPL solutions with your existing payment methods. Our payment processing services are PCI-compliant, making sure that all transactions are secure and meet industry standards.

Don’t wait too long! Get in touch with us today (800-757-5453), and start growing.