It’s been a groundbreaking year so far for Buy Now Pay Later with massive increases in consumer demand, murmurs of BNPL regulation and fintech stocks crashing. 

BNPL is predicted to reach $1 trillion in annual transaction value by 2025. (Source: CBInsights)

While Apple Pay Later has raised some concerns for many BNPL fintech players, it further cements the fact that BNPL is here to stay. 

What other BNPL trends lie ahead and what will they mean for your business?

Trend 1: More demand for regulated BNPL products

The BNPL bug has bitten merchants and consumers hard, but talk of regulation has tempered some of the demand for BNPL from fintech companies and sent the pendulum swinging back to traditional lenders and banks. 

What to do: With your own white-labeled BNPL offerings, you can tap into this increased demand for regulated financing.

*70% of BNPL users would prefer BNPL from their banks over fintechs.

(Source: PYMNTS)

Trend 2: Merchants seeing BNPL for the long game

With so much competition and distraction in the online and physical retail space, it’s crucial for retailers to retain customer loyalty. 

Merchants are becoming more and more reluctant to sacrifice their customer relationship to a third-party BNPL provider and are seeing the value of offering their own BNPL payment option.

What to do: Provide merchants with a white-labeled BNPL solution, which is seamlessly embedded into the merchant’s own customer journey in their brand.

*61% of BNPL users would prefer BNPL from the retailer instead of from a third party.

(Ascent survey)

Trend 3: Players focusing on core capabilities

Nowadays the line between finance and technology is blurring. What works best is when companies stick to their core competencies – banks and lenders should provide the balance sheet and the financing and technology companies should focus on providing the technological capabilities. 

This is particularly important in the current economy with inflation rates being, well, inflated. With their stable and powerful balance sheets, banks are less affected than fintechs by inflation, which are dependent on external sources for their balance sheet lending.

What to do: By partnering with a tech company, you can focus on the financing aspect of your BNPL solution without worrying about the technology.

Trend 4: Death of one-size-fits-all BNPL solutions

With so many different consumers with different credit profiles, merchants and banks need a BNPL solution that caters to these diverse needs. 

What to do: With a multi-lender waterfall BNPL solution, you can provide merchants with high BNPL acceptance rates, cater to every consumer use case and increase merchant and customer satisfaction. 

What is multi-lender waterfall BNPL? By smart-routing the customer’s financing application from prime lender to secondary lender, a multi-lender waterfall ensures high BNPL approval rates and customer conversions.

Trend 5: Full-component solutions

Players are realizing that BNPL isn’t piecemeal. It’s vital to have a solution that fulfills all components that banks are missing.

What to do: Find a solution that encompasses all key elements of a successful BNPL solution including:

  • Merchant onboarding
  • User journeys
  • Payment stack – virtual card, simple API integration, e-commerce platform plugins
  • Reporting

Key Takeaways

The Buy Now Pay Later market is ripe for traditional, regulated financial institutions to step up and claim market share. 

Snapshot: Top 5 BNPL Trends for 2023

  1. More demand for regulated BNPL
  2. Merchants seeing BNPL for the long game
  3. Players focusing on core capabilities
  4. Death of one-size-fits-all BNPL
  5. Full-component solutions

Want to discuss how to use these trends to your advantage? 

Schedule an intro call with a BNPL expert.

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Disclaimer: The information in this article is for informational purposes only, and should not be construed or relied upon as legal advice on any subject matter. The author is not responsible for any consequences whatsoever arising from the use of such information.