Low cost of credit will drive BNPL boom
The low cost of credit is driving a boom in the number of buy-now, pay-later (BNPL) users, with new research predicting that there will be 900 million BNPL users by 2027 – up from 360 million in 2022.
According to Juniper Research, this growth will be due to the anticipated economic downturn which will increase the ongoing demand for low-cost credit solutions.
The research highlighted India as having potential for rapid growth in the BNPL marketplace, with users predicted to grow from 25 million in 2022 to 116 million by 2027.
Several peer-to-peer lending platforms and former P2P lenders have signalled an interest in the BNPL market.
Funding Circle launched a beta trial of its BNPL product – FlexiPay – in August 2021, letting companies spread any UK invoice or supplier payment over three months, with the initial payment made upfront on their behalf. By May 2022, the business lender said the product had exceeded its expectations.
Read more: Can P2P lenders leverage success in the growing BNPL market?
BNPL schemes allow consumers to spread the cost of their purchases without interest charges. Furthermore, most BNPL services do not require hard credit checks.
The UK government has signalled that it plans to regulate BNPL products, making lenders responsible for ensuring that all loans are affordable.
Juniper Research advised BNPL vendors to differentiate their services to ensure that they can compete in this increasingly competitive landscape. This includes offering virtual cards, browser extensions that automatically facilitate BNPL payment services, and digital loyalty schemes.
Read more: Government tells BNPL lenders to ensure loan affordability