BNPL Industry Dynamics

Buy Now Pay Later (BNPL): Industry Analysis

Buy now pay later (BNPL) has become an important part of consumers' purchase decisions and payment behavior, and the industry has reached a critical stage of development. As it appears to be approaching maturity, a careful analysis of the industry reveals both opportunities and risks.

Furthermore, competition will increase with the direct entrance of big techs such as Apple and Block. To succeed in the current environment, market players need to navigate increasing regulatory scrutiny, rising interest rates, and an oversupply of BNPL credit that has been extended to consumers who, at times, have been too eager to spend.

In a March 2022 paper, we discussed the characteristics of the BNPL business model. This research focuses on market structure developments, the reactions of BNPL players, and mergers and acquisitions (M&A) in the industry, while providing a working hypothesis on the scaling and diversification efforts in play.

Based on this analysis, we present the potential implications for business-to-consumer BNPL lenders, established financial players, technology providers, and retailers alike.

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