Buy Now, Pay Later: The Ultimate Research Guide

February 21, 2022
February 21, 2022
BNPLs in 2022

July 2022 Update: Since launching this guide earlier this year, Apple announced its buy now, pay later service called Apple Pay Later.


In addition, Amazon launched monthly installments and partnerships with some of the BNPL providers listed below (such as Affirm and Zip).


These two options are not currently included below but we wanted to make note we are aware of these two major global offerings.

Table of Contents

In the past, if you wanted to buy something expensive, you had to save up for it. But nowadays, there are a ton of different payment options that allow you to spread the cost of your purchase over time. Buy now, pay later (BNPL) means exactly that: you can buy what you want now, and pay for it in installments over the next several weeks, months, or even years. It's often used by people who don't want to wait for their paychecks to come in, or by those who don't have enough money saved up for a big purchase.

That said, it's also an industry rife with fraud. So, if you're thinking about offering buy now, pay later services to your customers, it's important to be aware of the risks involved and take steps to mitigate them.

In this article, we'll take a deep dive into the BNPL industry and its players to get a better understanding of the current landscape, the risks facing the industry and where this technology might be headed in the future. More specifically, we will look at BNPL companies by region and growth, how exactly BNPL companies democratize credit, the rise of BNPL fraud, and more.

Top buy now, pay later companies by transaction volume

The popularity of buy now, pay later services is on the rise, as more and more people are looking for ways to spread out their payments and avoid interest payments.

There are a number of BNPL companies out there, but some of them are far more popular than others. According to corporate data sources curated by Statista, the top five BNPL companies by transaction volume are Klarna, Afterpay, Affirm, Zip, and Sezzle.

Biggest BNPL providers

Klarna is by far the largest of these companies, with $53 billion in GMV (gross merchandise volume). Afterpay is a distant second, with $11 billion in GMV. Affirm comes in at $4.6 billion in GMV, Zip at $2.1 billion in GMV, and Sezzle at roughly $400 million in GMV.

With well over 50 BNPL firms on the market, there’s a very long tail of providers with much smaller gross merchandise volume figures.

One reason Klarna is so much larger than the other companies is that it was one of the first solutions to offer a great BNPL solution with silent credit checks done in the background, enabling consumers to spend right away and not incur interest. They’ve also strategically expanded and partnered with over 100,000 retailers, and they offer a top-rated software that’s seamless for both buyers and merchants alike.

It will be interesting to see how these companies compete in the coming years. With the increasing popularity of buy now pay later, they are all likely to see continued growth.

How buy now, pay later companies democratize credit

The traditional credit industry is often seen as opaque and inaccessible, especially to consumers who don't have a perfect credit history. This has led to millions of financially underserved consumers, who are forced to resort to high-interest alternatives like payday loans when they need to make a purchase.

BNPL companies like Affirm are changing this by making credit more accessible and affordable. These companies allow consumers to pay for their purchases over time, with interest rates that are often much lower than those of traditional credit cards. This makes it possible for more people to buy what they need, when they need it.

BNPL companies are also more transparent than traditional credit card companies. They typically disclose the interest rate and any other fees upfront, so consumers know exactly what they're getting into. This level of transparency is much needed in the credit industry, where hidden fees and interest rates have become all too common.

Overall, BNPL companies are helping to democratize credit by making it more accessible and affordable for everyone. This is a win for both consumers and businesses, as it makes it easier for people to buy what they need while also stimulating economic growth.

How does buy now, pay later make money?

Credit card companies profit by charging high interest rates on debt. BNPL companies like Affirm, on the other hand, generally don’t charge interest rates. This business model is made possible by modern technology that allows companies to quickly and accurately assess a customer’s creditworthiness.

BNPL companies make money from retailer partnerships, instead of from the customer. This is typically in the form of a cut from retail sales, so that the more customers spend, the greater the profits for the BNPL firm.

Practical Ecommerce reports that merchants usually pay around 2 to 8 percent of the purchase amount, while some providers also charge a flat fee of 30 cents per transaction.

Affirm is one of the leading BNPL companies, and they are quickly growing in popularity. In a recent study, it was revealed 64% of US BNPL customers are low income. This is because BNPL companies make it easy for people to make immediate purchases with no interest rates.

This results in greater sales and order values, which is why retailers partner with BNPL providers, in spite of their relatively high fees,

Buy now, pay later venture capital funding by year

In recent years, the buy now, pay later industry has seen rapid growth, with venture capitalists pouring billions of dollars into the sector. BNPL companies raised $11 billion in venture capital in 2021, up from just $291 million in 2018.

CBInsights has analyzed the growth of BNPL funding. Here’s an overview.

BNPL funding

What is behind this dramatic growth? There are several factors at play. First, BNPL services are attractive to consumers because they offer a convenient way to pay for items over time. This is also true for small businesses and entrepreneurs, who may not have the cash flow to purchase goods or services upfront.

Second, BNPL companies are benefiting from a strong economy. With low unemployment and healthy consumer spending, more people are open to the luxuries and conveniences that BNPL services offer.

Finally, BNPL companies are benefiting from the increasing popularity of e-commerce. As more consumers shift their spending online, they are looking for ways to buy items without having to pay up front. BNPL services provide an easy way to do this.

What does the future hold for the BNPL industry? There is no doubt that it will continue to grow in popularity, as more consumers and businesses discover the benefits of these services.

However, there is also potential for a slowdown if the economy weakens or if there is a major recession. In any case, the BNPL industry is here to stay and is likely to experience continued growth in the years ahead.

Buy now, pay later faces increasing fraud losses

It's no secret that online payment fraud is on the rise. In fact, according to Juniper Research, global eCommerce fraud losses hit $17.5 billion in 2020, jumping by an alarming $2.5 billion in 2021 to hit $20 billion. These losses are expected to grow even further, with the payment card industry facing $400 billion in fraud losses over the next decade.

BNPL solutions, in particular, are coming under increased attack as fraudsters find new ways to exploit the system. While BNPL can be a more convenient way for customers to pay for their purchases, it also leaves merchants vulnerable to fraudulent transactions.

In fact, identity theft in Australia involving BNPL doubled to a record in 2020, data by Reuters indicated. As explored in a Financial Review article, BNPL solutions enable a “frictionless” process, a double-edged sword that also makes it easier for scammers to commit fraud.

What are the main drivers of this surge in payment fraud? There are several reasons:

  • The increasing popularity of online shopping
  • The increasing use of mobile devices for online shopping
  • The increasing sophistication of fraudsters

Payment fraud takes many different forms, but the most common types are account takeover, abusing the default line of credit for new accounts, and repayments with a stolen credit card.

Account takeover is when a fraudster gains access to a victim's account and uses it to make fraudulent purchases. This type of fraud is becoming increasingly common as criminals use ever-more sophisticated methods to steal login credentials.

Abusing the default line of credit for new accounts is when a fraudster sets up a new account with a bogus name and address, and then uses the default credit limit to make fraudulent purchases.

Repayments with a stolen credit card are when a fraudster uses a stolen credit card to make a payment for something that was previously purchased with a legitimate credit card. This type of fraud is becoming more common as criminals become more sophisticated in their methods of obtaining stolen credit card details.

What are the risks of buy now, pay later?

As we've explored, the BNPL industry is facing increasing fraud risks. However, it's not just fraud that companies need to worry about. There are a number of other risks associated with this payment method.

For one, there's the possibility of being charged interest and fees if you're late on your payments. This can quickly spiral out of control, especially if you're not careful about how much you're spending.

There's also the risk of not being able to get a refund on items you've already bought. If something goes wrong with your purchase, you may find it difficult to get your money back.

Finally, it's easy to get carried away and spend more than you can afford when using BNPL. This can lead to serious financial problems down the line.

Buy now, pay later companies by region

Allied Market Research projects that BNPL will reach a valuation of almost $4 trillion by 2030. So, it's no surprise that startups in this space are sprouting up all over the world. In order to help you keep track of the biggest and most notable BNPL companies in each region, we've put together this handy list.

North America

Home to BNPL heavyweight Affirm, the North American landscape is a hotbed of innovation and growth in the BNPL space. With numerous other players vying for market share, the race is on to see who can provide the best financing options and customer experiences. This dynamic environment is resulting in ever-more competitive benefits and faster approvals, as companies try to one-up each other.

At the same time, an increasing focus on data and analytics is allowing companies to better target their products and services, resulting in increased loan volumes and customer satisfaction. In the long term, this should lead to even more growth in the BNPL sector, as consumers become more comfortable with using financing to purchase items both big and small.

Some BNPL players in the US include:

Affirm

Affirm is a financial technology company based in San Francisco. They offer installment loans to consumers for use at the point of sale, allowing them to finance a purchase without hidden fees or sneaky fine print. Affirm is traded as AFRM on Nasdaq and employs over 1,000 people.

Their goal is to provide a better alternative to credit card companies, with no fees, no hidden charges, and no regrets.

ChargeAfter

From new furniture to appliances and car parts, millions of Americans prefer to use BNPL solutions in order to spread out the cost of their purchase over time. ChargeAfter is a global network with a complete solution for Point-of-Sale Financing from multiple lenders, offering shoppers flexible financing options such as 0% APR, installment loans, buy now pay later, open lines of credit, and lease to own offers.

They claim approval rates of 85%, an average order value (AOV) increase of 45%, and sales increasing by 30%. ChargeAfter is enabling equal monthly payments, flexible payments, and more for Americans all across the country.

SplitIt

Since 2012, SplitIt has been a leading BNPL solution, allowing customers to use their own credit card and spread the cost of their purchase over time. Unlike other "buy now, pay later" options, SplitIt doesn't charge any interest or fees, making it a more affordable option for responsible credit card users.

They were founded in NY and last raised $100 million in late 2020. Their mission is to provide a better way for customers to buy the things they need and want, without having to worry about interest or fees.

Sezzle

With Sezzle, shoppers can purchase today and make four interest-free payments over six weeks. This flexible payment solution helps increase conversions, average order value, and customer satisfaction. Plus, Sezzle claims to be the highest-rated Buy Now, Pay Later solution.

Signing up is quick and easy, and approval decisions are instant. You can use Sezzle at over 44,000 brands worldwide.

Scratchpay

Americans with medical expenses often face a difficult choice: pay for care up-front, or use a high-interest credit card and risk accruing debt. Scratchpay is changing that, with a patient financing solution that is simple, affordable, and doesn't affect your credit score.

They have the highest approvals rate in the industry, and charge no hidden fees or penalties. Plus, you can pay off your balance at any time without incurring interest. So if you need to finance a medical procedure, Scratchpay is a top choice for many.

Africa

Africa is a key region for the development of BNPL, as it is home to a number of mobile-first countries. In addition, there is a large, untapped market for BNPL services in Africa.

Africa has a youthful population, with almost 60% of the population below the age of 25. This presents a major opportunity for BNPL providers to tap into Africa’s growing youth population.

Africa also has a large unbanked population, which represents a significant opportunity for BNPL providers. In fact, 57% of the population in Africa does not have access to formal financial services. This provides an opportunity for BNPL providers to provide financial services to the continent’s vast population, by taking advantage of alternative data sources for approvals.

Africa is also a mobile-first continent, with around half of the population using mobile phones. This presents a major opportunity for providers of mobile-based BNPL services. BNPL players include Motito, CredPal,Lipa Later, and Sympl.

Motito

PayLater by Motito is a Ghanaian payment method that allows you to buy now and pay later. They pride themselves in making hire purchases as easy as possible, with a focus on African startups and customers. With just 5 employees, Motito is a very early-stage startup dedicated to providing a better way for people to buy what they need and want.

CredPal

CredPal is a Nigerian BNPL startup offering two payment options: Pay in 30 days (0% interest for all qualifying payments) or spread payment between 2 - 6 months. This makes it convenient for customers to shop from their partnered merchants, whether online or in-store, and enjoy discounts and cashback.

For merchants, CredPal provides a platform that helps them acquire more customers and increase sales.

Lipa Later

Lipa Later, a buy now pay later company operating in Kenya, Rwanda, Uganda and Nigeria, has raised $12 million from a group of investors.

Sympl

Buy Now, Pay Later is becoming increasingly popular in Egypt, and Sympl has emerged as a leading company in the space. They announced a $6 million seed funding round led by UAE's Beco Capital, with the goal of expanding their merchant network and footprint across Egypt and internationally.

Sympl offers customers a zero-interest payment plan in three to five installments, after charging an upfront fixed fee. The process is simple - payment plans are approved at checkout with no pre-registration required - and merchants can also sell directly to consumers on short-term, zero-interest payment plans.

India

India is the world's second-most populous country with over 1.3 billion people, and it is also one of the most diverse countries in the world, with 22 official languages. The Indian economy is set to become the third-largest in the world by 2031, according to projections by CEBR.

The retail sector in India was estimated to be worth $779 billion in 2019 and is expected to grow to $1.4 trillion by 2026. The credit card penetration rate in India is extremely low at around 3 percent, as compared to the global average of 19 percent. This presents a huge opportunity for growth in the payments industry in India.

The growth of the BNPL segment in India has been fuelled by the growth of digital payments in India. The usage of digital payments has grown rapidly in India in recent years due to the increase in smartphone penetration and the launch of smart cities and other digital initiatives.

Players include Simpl, ZestMoney, and ePayLater.

Simpl

Simpl, a six-year-old startup, has raised $83 million to date, with Valar Ventures and IA Ventures leading its Series B round. LFH Ventures and some existing investors also participated in the round. Simpl partners with popular online brands and offers their customers the ability to make purchases without paying for them at that very moment.

Over the years, it has also developed a range of offerings, including a one-time checkout feature; Bill Box, which allows customers to automate their recurring expense payouts, and splitting a bill in three parts. As digital payments increase their reach in India, buy now, pay later services have started to gain fast traction.

ZestMoney

Since its inception in 2016, ZestMoney has become one of the fastest-growing fintechs in India. The company's unique offering allows users to shop online and pay back later through easy installments, using mobile technology, digital banking, and artificial intelligence.

This makes it easier for people who wouldn't normally be able to get loans for consumer purchases to still have access to the things they need and want.

ePayLater

Since its launch in 2015, ePayLater has been providing a zero cost credit solution for SMEs in India, helping them purchase the supplies they need without incurring any interest fees. With a credit limit of up to 25 lakhs, ePayLater is making it easier for businesses to get the funding they need to grow.

China

In China, BNPL is expanding rapidly, with multiple players entering the market in early 2021. Bloomberg Intelligence estimates that BNPL's penetration of global retail e-commerce will reach 1.6% in 2020, and could grow to 4% by 2023.

China may not reach 4% penetration for another 10 years, but this would still turn it into a $233 billion market. BNPL's expansion into China's offline consumption market (66.2 trillion yuan in 2020) is also underway, with overseas markets providing valuable experiences.

Chinese BNPL players include Alibaba and LexinFintech.

Alibaba

Alibaba's Alipay has been offering a BNPL option for their customers since 2019, partnering with Klarna to allow Aliexpress shoppers to pay later. The ecommerce platform's new store opening rate increased by 132% in 2020, and Alibaba also accounted for 53.3% of China's ecommerce retail market in 2020, while in the first quarter of 2020, Alipay boasted a 55% market share in China.

LexinFintech

Amid the COVID-19 pandemic, LexinFintech struggled in 2020. However, BNPL product Maiya could give them a boost in the Chinese market.

Europe

Home to the 800-pound gorilla in the BNPL space, Klarna, Europe’s BNPL landscape is unsurprisingly well-developed. Other notable players include Alma, Divido, Butter, and Zilch, all of which have made inroads into the market through aggressive marketing and product offerings.

Klarna

By transaction volume, Klarna is the world leader in BNPL (Buy Now Pay Later) payments. Klarna was founded in Sweden in 2005, and has been expanding rapidly, with over 4000 employees and 15 locations.

Klarna is a trusted name in online financial services, providing payment solutions for online storefronts and direct payments, as well as post-purchase payments. With over 1 billion in revenue, Klarna is a major player in the fintech world.

Klarna's easy-to-use app makes it simple to split any purchase into 4 interest-free payments, whether you're shopping online or in-store.

Alma

Top Klarna competitor, Alma, is a French BNPL heavyweight that has been making waves since its 2017 launch. Boasting more than USD 59.4 million in recent equity from top investors, Alma has quickly grown to 4,000+ merchants and processes hundreds of millions in euros each year.

Offering a top-rated BNPL experience with a 4.8/5 Trustpilot rating, Alma is definitely one to watch in the payment space.

Divido

Divido, a London-based platform for retail finance, has secured a $30 million Series B round of funding to fuel its international expansion. The company's platform enables retailers to offer consumers the option to buy now, pay later at the point of sale. This proven payment solution helps merchants grow their sales and expand their customer base.

Butter

Traditional BNPL providers have been limited to online transactions, but Butter is shaking things up with the launch of its own BNPL card. This physical card will make it easier than ever to buy what you want now and pay for it later.

This UK-based company is looking to put a nail in the coffin of the credit card, which is seeing a decline in popularity. More and more people are turning to BNPL as a way to spread out their payments.

Zilch

London-based Zilch is a Mastercard-partnered BNPL app that allows customers to shop anywhere Mastercard is accepted, without any interest or added fees. Zilch claims to be as safe as using your bank card and has raised over $339 million in investment to date - making it one of the most successful BNPL platforms in Europe.

Southeast Asia

Southeast Asia is a key market for BNPL, with a large and growing population, rapid economic growth, and a young demographic. In addition, Southeast Asia is a region where cash is still prevalent, providing an opportunity for BNPL providers to displace cash transactions.

The Southeast Asia BNPL market is currently fragmented, with a number of small players operating in the region. This presents an opportunity for larger players to enter the market and gain market share. The leading BNPL providers in the region include Atome, Rely, TendoPay, and Fundiin.

Atome

Southeast Asia is entering the BNPL foray in a big way, with a new partnership between StanChart and Atome. The two companies are coming together to deliver mobile-first financial services for consumers across Asia, with a planned $500 million financing to support Atome to expand its regional ecosystem of merchants and customers.

Atome is a young company, but it's quickly making a name for itself in the region. It has a presence across Southeast Asia, India and Greater China, and partners with over 5,000 online and offline retailers. It also operates the digital lending platform Kredit Pintar in Indonesia.

With this new partnership, Atome is poised for even more growth in the coming years. StanChart's vast experience in the financial sector will help Atome to reach even more consumers, while Atome's technical expertise will help StanChart to move into the BNPL space. It's a win-win for both companies, and consumers throughout Asia will benefit from their collaboration.

Rely

Singapore's very own BNPL superstar, Rely, is shaking up the e-commerce scene with their innovative interest-free installment service. This young company has already raised an impressive $75 million and is gearing up to expand.

TendoPay

Filipino consumers now have access to convenient, affordable installment loans through TendoPay, thanks to a strategic investment by Zip, the leading Australian BNPL provider. Since 2018, TendoPay has been providing digital installment plan solutions, with a focus on responsible lending.

This platform gives Filipino consumers the flexibility to repay their loans over a range of terms, from 15 days to 24 months. With Zip's support, TendoPay is well-positioned to continue scaling and expand its reach in the Philippines.

Fundiin

Vietnamese fintech startup Fundiin has raised $1.8 million in a seed round with participation from Genesia Ventures, JAFCO Asia, Xffirmers, Trihill Capital, and others.

Fundiin is the leading BNPL provider in Vietnam, and helps retailers increase sales by up to 30%. Via its zero-cost buy-now-pay-later facilities, Fundiin allows customers to spread the cost of their purchases over time, without incurring any additional charges.

The company plans to use the new funding to build out its technology and expand into new markets across Southeast Asia.

Latin America

Latin America is a large and diverse region that comprises a number of countries with different levels of development. In terms of BNPL, there is significant variation in the landscape from country to country. Key players include Nelo, Addi, and Atrato.

Nelo

While BNPL has been making waves, Latin America remains largely untouched by the growing trend. Nelo, a startup founded by experienced international growth team leaders, plans to change that.

With $20 million in new funding, Nelo is poised to bring BNPL to Mexico and beyond. The company's app already lets users make purchases from some of the biggest names in ecommerce, including Amazon, Mercado Libre, Telcel, Netflix, and Spotify.

So far, Nelo has been successful in attracting merchants like Steve Madden and Ben & Frank. And with its fresh influx of cash, there's no telling how far it will go.

Addi

Following $200 million of debt and equity, Addi is now valued at over $700 million. This Latin American BNPL company has been expanding rapidly, with plans to open an office in Mexico in 2022 and to broaden its reach to other markets.

Atrato

Atrato is a Mexican-based BNPL firm that last raised $15 million in debt. Atrato's technology allows it to finance up to $150,000 Mexican pesos ($7,545 USD) in a matter of minutes, making it an attractive option for larger e-commerce payments.

Australia & New Zealand

Perhaps surprisingly, given the relative isolation of the two countries, both Australia and New Zealand have fairly active BNPL markets. This is likely due to a combination of factors including the wide range of products and services available for purchase via BNPL, the sheer convenience, and the ability to spread payments out over time.

Players here include Zip, Openpay, Limepay, Payright, Afterpay, Brighte, and many others.

Zip

Zip is a Sydney-born global payment platform that lets customers split any purchase into 4 installments over 6 weeks. With over 8 million shoppers using Zip, it's one of the most popular BNPL platforms in the world. Businesses can integrate Zip's flexible payment platform in minutes, without needing any APIs.

Zip has helped businesses increase their conversion rate by 20%, topline sales by 20%, repeat customer rate by 80%, and average order value by 60%.

These metrics perfectly illustrate why merchants choose to partner with BNPL platforms like Zip. By providing an easy and convenient payment method, BNPL platforms can help businesses drive more sales and improve customer retention.

Openpay

Australian BNPL contender Openpay offers smarter payment plans for bigger purchases, with limits up to $20,000. And now, with a new partnership deal in place with American Express, Openpay is set to take on the global market

However, with the departure of CEO Michael Eidel, some industry insiders are wondering whether Openpay's ambitious plans will still go ahead. Only time will tell whether this Australian startup can make it big in the global BNPL market.

Limepay

Finding a niche in the competitive Australian payments landscape, LimePay offers an easy and convenient way to pay for goods and services online. With no redirects or extra logins, LimePay puts users in control of their payments.

Plus, through a partnership with Domain, LimePay offers home sellers the ability to market, renovate or upgrade their home before paying back the costs once the property is sold.

Middle East

The Middle East BNPL landscape is rapidly evolving, with new players and partnerships emerging on a regular basis. While the market is still in its early stages of development, it is showing strong potential for future growth, with players including Cashew, Tabby, Shahry, Postpay, and Tamara.

Tabby

Seeking to dominate the Gulf Cooperation Council states' (GCC) BNPL landscape, Tabby has announced it has secured a massive $50 million in Series B funding. Valued at $300 million, this latest round of investment will help Tabby further cement its position as the leading buy now, pay later solution in the region.

Founded by Hosam Arab following his departure from fashion retailer Namshi, Tabby was conceived as a solution to the economic difficulties faced by the MENA and GCC region. With this latest injection of capital, Tabby looks poised to take on even more prominence in these markets.

Tamara

Saudi BNPL firm recently raised a $110 million Series A led by Checkout.com, following an earlier $6 million seed round. Launching in 2020, they expanded incredibly rapidly.

Tamara lets consumers split payments in thirds: One third upon purchase, and the rest over the course of 60 days, of coures without fees or interest.

Cashew

An early-stage startup, Cashew has already secured $13.5 million in funding for its pre-series A round. Operating out of the DIFC and Saudi Arabia, Cashew is expanding to other GCC markets.

The company credits its success to its investment in technology and team building, with all money going back into the business rather than toward loan repayment. Strong product and technology teams are the heart of Cashew's business model and continue to propel it forward.

Where is buy now, pay later headed?

As global consumers become increasingly comfortable with the idea of making purchases with a few clicks or taps, the popularity of buy now, pay later services continues to grow. In fact, the global BNPL market is expected to hit $1 trillion in annual gross merchandise volume by 2025, according to a report from CBInsights.

Strategic partnerships and consolidation are becoming key to success in the BNPL market. Late last year, for example, Square agreed to acquire Afterpay, an Australian company that offers BNPL services, for $29 billion. And in January of this year, Zip and Sezzle were in talks to merge amidst industry consolidation.

Regulations are also an increasingly important consideration for companies operating in the BNPL space. In the United Kingdom, for example, regulators are closely watching the growth of BNPL services, and there are some concerns that they could be used for fraud or other illegal activities.

At the same time, growing transaction volume means an increased risk of fraud. In order to protect themselves, BNPLs can use tools like Fingerprint. This device fingerprinting allows websites to effortlessly stop fraud, spam, and account takeover.

All article tags

  • Ecommerce fraud
  • Anti Fraud technology
  • Buy now pay later