What: While the market is growing and customer demand is increasing, no player has yet found the magic formula guaranteeing profits and ROI.

Why it is important: Department stores have embraced BNPL as one of the available options on the market to provide customers with various payment options. They are paying a hefty amount for that on their sales, and the question to know whether this is justified or not remains.

Buy Now Pay Later is an industry that represents several billions across the planet, however, none of the industry’s major players (Klarna, Affirm, Afterpay, Zip) are profitable. In addition, they are facing raising concerns both from their customers (retailers who are wondering if the fee they pay justifies a sale that they would have probably done anyways) and authorities (worrying about the impact of debt on individuals).

BNPL solutions, which claim to reinvent credit, started to gain traction during the 2008 financial crisis, especially within the younger generation, and that traction increased during the 2020 pandemic. It is expected to represent a total market value of USD 438bn by 2025.

However, BPNL have to cover the cost of an ever-changing technology, employee retention and customer acquisition. Even though the market is growing and all players are accelerating, none of them have found a way to make operations profitable. Payment Dive believes that this situation is going to worsen as competition on this market is increasing and even coming from more traditional players such as credit card companies.

Buy Now, Pay Later: market players see their losses widening