The History of BNPL, And What The Future Holds

With the pandemic causing shockwaves throughout the global economy, it might take a concept such as Buy Now Pay Later (BNPL) to save the day. Here, we discover how consumers are embracing it and what the BNPL future looks like.

We’ve all read news reports on how the current global pandemic has affected the economy. Businesses started to collapse, unemployment increased, and the general spending power of the public have become significantly reduced.


However, there was a silver lining for one particular financial service — buy now pay later (BNPL). The financial uncertainty caused by the pandemic has taught consumers to be more cautious with their spending habits. Therefore, more and more fintech (finance technology) companies are seizing the opportunity to implement BNPL solutions.

What is BNPL?


In case you’re unfamiliar with the term, BNPL is a financing arrangement that allows consumers to make purchases without paying for them all at once. It’s a method that’s used both in-store and online. It involves customers purchasing goods on credit, then repaying that credit over a period of time, usually interest-free.


In simpler terms, instead of paying for items in cash, a customer can simply select the BNPL option instead. This way, the customer makes three or four equally spaced instalments which are taken directly from their payment card. Either way, there are no extra fees or interest to pay, provided the customer pays on time.


The whole model of BNPL, from start to finish, looks like this:

  • A BNPL firm goes into partnership with a popular retailer
  • That retailer offers BNPL as a payment method
  • The customer selects the BNPL option at checkout. This works for both in-store and online purchases
  • The customer receives their items immediately, and pays them back over time


How long and how many times a customer has to make repayments will depend on which provider he uses.


How is BNPL different from credit cards?


Since BNPL payments are interest-free, purchasing an item with BNPL will cost the same as buying it outright, as long as you pay on time. This is different to credit cards where they charge interest when you have a balance.


However,  credit card networks like Visa and Mastercard have started to partner with various BNPL platforms to allow more merchants to piggyback off these networks and allow such services to be used. This proves that BNPL is an attractive option to the customer.


The BNPL future looks bright!


BNPL is on an upward trajectory across the globe. According to Coherent Market Insights, the BNPL market  is set to grow from US$7.3 billion in 2019 to US$33.6 billion in 2027 at a compound annual growth rate (CAGR) of 21.2%.


During this timeframe, the fastest-growing region is expected to be the Asia Pacific. This boils down to the increasing number of internet users as can be seen in the 40 million new users who joined Southeast Asia’s digital economy in 2020 alone.This will bring the total number of Internet users in the region to 400 million.


A different report from IBIS World predicts that the BNPL industry will grow at 9.8% annually over the next five years, eventually exceeding $1 billion. Furthermore, industry professionals, like Simpl Co-Founder and CEO Nityanand Sharma, say eCommerce will soon move away from credit cards to BNPL schemes.


The global pandemic has accelerated the growth of BNPL. Households that are facing financial difficulties have resorted to using BNPL services to purchase essential items, including clothes and books in department stores. Online retail stores also offer BNPL services, allowing cash-strapped households to purchase groceries through instalments. The ability to shop now and pay for it later is very attractive for consumers who are struggling financially. The BNPL future looks bright!


Get BNPL financing via SmartFunding!


SmartFunding is a fintech company that connects Investors and Borrowers. We offer alternative short-term financing options for businesses, with a 100% focus on SMEs and startups.


SmartFunding currently offers two financing options for your business:

  1. Term Financing
  2. BNPL


Our BNPL financing allows you to run your business smoothly with our procurement financing solution. This option provides SMEs with the flexibility to finance the purchase of goods and services, with zero upfront payment, and instead make instalment payments over 6-9 months. We also provide a simple and transparent fee structure. Funds will be disbursed straight to vendors. You should take advantage of the bright BNPL future!


Our financing options are accessible to companies that fulfil the following criteria:

  • Have been operating for more than 1 year
  • Annual revenue of at least S$150,000


We may also review companies that do not meet the above criteria on a case by case basis. Please contact us for a free consultation via:

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