The future of BNPL

There are now 50+ fintechs driving BNPL services across the globe — with banks and other transaction-based businesses eager to get in on the act.

The sheer number of competitors in the space is an indication that we should pay attention to this payment method and where it might be heading.

With that in mind, Checkout.com asked three experts their opinions on the future of this alternative payment method.

What new innovations do you foresee for BNPL in the near future? How will these benefit merchants?

Arvind Ronta, Global Head of Installments, Visa:

“Installments are flexing a new muscle for a new generation of consumers looking for flexible, uncomplicated ways to pay. But the technology and players that got us here aren’t the only ones that will continue to innovate and carry the trend forward.

Looking back at the mainstream adoption of buy now, pay later (BNPL) over the past few years, the key driver was the explosive growth of BNPL fintechs. The numbers are astounding. Investment in companies that offered BNPL payments was upwards of $4 billion in 2021 alone. Pair that with an uptick in M&A activity, and you have fertile grounds for growing a trend.”

Abdulmajeed Alsukhan, Co-Founder & CEO, Tamara:

“BNPL is projected to reach $680 billion in transaction volume worldwide by 2025 and keep on growing after that. It is an exciting time for the industry, with new innovations constantly being developed and released.

We anticipate that the BNPL model will see much wider use across industries beyond the retail space – from healthcare to travel and B2B – with providers ultimately evolving into discovery platforms and end-to-end shopping solutions. Merchants stand to benefit the most from these developments, with increased innovation bringing new options which meet customers’ evolving needs, ultimately encouraging an uplift in spending.

On the regulatory side, countries which enable the future of FinTech by encouraging enterprise  – such as through Saudi Arabia’s flagship sandbox scheme, which Tamara is a part of – will see the greatest impact of payments progress.”

Ellen Kuder, VP Ecosystem Growth, Arvato:

“As competition within the BNPL space intensifies, there’s more emphasis than ever to innovate and solve the customers core problems. Things like automatic reminders are mitigating the risk of late payments, and part-payments are giving customers additional flexibility on higher-value purchases. These innovations make shoppers feel more comfortable and increase the likelihood of conversion at the checkout.”

What should merchants look for when choosing the options to add to their checkout?

Arvind Ronta, Global Head of Installments, Visa:

“While the fintechs are going to continue to be prominent players, banks are no longer sitting on the sidelines. They want to provide their own BNPL offerings to meet growing consumer demand.

According to recent Visa research, nearly half of consumers (49%) say they are more likely to use a BNPL offering if it’s available through their existing card. And 70% of those surveyed were likely to use BNPL if their purchases were eligible for the same rewards and loyalty points as credit and debit card purchases.

The space is headed towards a new level of maturity and ubiquity as banks come to the table with their history of risk management and ability to integrate seamless BNPL experiences for customers on their existing credit lines. BNPL fintechs are also evolving as they face profitability pressures and regulatory scrutiny, putting delinquencies and credit risk management back into focus.”

Abdulmajeed Alsukhan, Co-Founder & CEO, Tamara:

“A key differentiating factor will be BNPL providers that go the extra mile for their merchants and are focused on creating and implementing innovative payment solutions. At Tamara, we have a dedicated team that is committed to merchant partner success.

This has resulted in strong commercial impacts for regional and international clients like IKEA, Shein and NAMSHI. Additionally, BNPL providers must keep up with expectations of the fast-growing millennial and gen-Z customer category while providing a frictionless customer experience.

An easy on-boarding process and seamless integration into merchant websites, like we have at Tamara, will help in encouraging purchasing. Ultimately, merchants must seek BNPL providers that are internationally recognized and offer a long-term, sustainable approach.”

Ellen Kuder, VP Ecosystem Growth, Arvato:

“How much emphasis is the provider putting on the customer experience, while not taking complete control of that relationship  – that's what merchants should be on the lookout for. Successful triangular relationship between Consumer, Merchant and Payment Provider is where the biggest differentiators are evolving these days.”

Find out more about BNPL and where it's heading in our guide. Or, watch our latest episode of Build Beyond that dives deeper into BNPL and where it's heading.