The buy nowThe pay later (BNPL) market, estimated to be worth $120 billion in 2021, has grown significantly in recent years. But for most of its rise to fame at the virtual cash register, BNPL has largely focused on everyday consumer goods like Urban Outfitters or a Peloton clothing. Now the credit method goes beyond the roots of e-commerce.
In recent months, large companies have entered the BNPL market, hoping to quickly approve consumers for installment loans as well.
Established players such as Mastercard and Visa have launched BNPL services through their respective credit cards; Mastercard also estimated that $7.2 trillion in transaction value will occur through BNPL by 2025. Stripe also recently partnered with BNPL heavyweight Affirm to offer payment plans to any business on its platform.
But while several major financial services companies are looking to integrate BNPL into everything, a new fleet of early-stage startups are looking to improve the strategy and offer tailor-made versions of BNPL for specific sectors ranging from healthcare and childcare to groceries and even charitable donations.
While these services can help consumers access expensive supplies — in the case of medical bills or childcare — is it really a good idea for consumers to pay even more in installments?
Kathleen Blum, vice president of Shopper Insights at C+R Research, isn’t so sure. The strategy has been proven to persuade consumers to spend beyond their means and has already pushed some users into debt.
“A lot of people who buy now, pay later, from a demographic point of view, tend to be a little less financially secure,” Blum told Marketingwithanoy. “There’s not really a good credit check. Are they really aware? Do they understand the complications of that?”
However, this new fleet of startups makes a compelling case for why they shouldn’t be viewed in the same way as the first wave of BNPL startups.