Buy Now, Pay Later or BNPL adoption is on track to grow significantly in the next few years with the Asia-Pacific region being one of the main drivers.
A study performed by Coherent Market Insights reveals that the international BNPL market had been valued at around $7.3 billion back in 2019. However, this nascent market is now projected to reach about $33.6 billion during 2027, growing at an annual rate of approximately 21.2% between 2020 and 2027. During this period, the APAC region is expected to be the fastest-growing area for BNPL services, because of the dramatic rise in the number of mobile Internet users.
The growing interest in BNPL has notably pushed regulatory authorities in the United Kingdom and Singapore to begin looking more closely at the potentially serious implications and risks involved with offering these payments services to consumers.
Recently, a spokesperson for the Monetary Authority of Singapore (MAS), the nation’s financial regulator, confirmed that they’re currently “reviewing the appropriate regulatory approach” for BNPL services, emphasizing that these schemes may led to “overstretched finances and cause potential financial distress.”
In the United Kingdom, the nation’s government stated last month that interest-free BNPL services will be monitored and regulated by the Financial Conduct Authority (FCA). The regulator pointed out that they had performed a review of the unsecured credit market which revealed that such products could negatively affect consumers’ financial lives.
BNPL products have become increasingly popular during the past year, which may be due to consumer behavior changes resulting from the COVID-19 pandemic. In the UK, BNPL services almost quadrupled last year, which took total lending to around £2.7 billion, with 5 million consumers trying out these payment options since the start of the Coronavirus crisis.
In Singapore, a study conducted by financial comparison platform Finder revealed that around 38% of local residents, or around 1.1 million consumers, have used some type of BNPL service.
In Asia, the booming BNPL market includes incumbent banking institutions that have introduced interest-free BNPL services along with credit card offerings. Digital commerce platforms and retailers in Asia are also offering their own flexible payments options. Fintech startups have been providing BNPL solutions as well.
As reported recently, Fintech firm Affirm revealed that 43% of new users prefer to use the company’s pay over time services as it helps them stay within budget, according to a new survey.
India’s consumer lending Fintech firm MoneyTap recently revealed that it plans to enter the booming Buy Now Pay Later market.
As covered last month, payments platform Adyen had reported that BNPL is the fastest-growing payment alternative in North America.