Buy now, pay later is here to stay.
A year ago, the biggest players in the space were companies founded solely to offer consumers the ability to pay in installments at the point of sale. Sweden’s Klarna, Australia’s Afterpay and U.S.-based Affirm were the top names associated with BNPL.
But the landscape looks very different now that more companies recognize the opportunity and fight for a piece of the pie. PayPal last month spent $2.7 billion for Japan’s Paidy in an effort to crack the market in Asia. In early August, Square announced plans to acquire Afterpay in a $29 billion deal. Even Apple is said to be getting into the BNPL game.
Today’s BNPL space is seeing a slow emergence of a symbiotic relationship between traditional financial institutions, payments upstarts and leading companies. As credit card and payments firms eye BNPL as a new growth opportunity, incumbents like Klarna and Affirm are seeking ways to make their installment loans available to more consumers.
The bigwigs enter the fray
Now that consumers are growing comfortable with BNPL services, the big credit card providers are taking steps to ensure they aren’t left behind. Visa said on Wednesday that a “growing list” of issuers, acquirers and fintechs are using its technology to offer BNPL options to their customers.
In a statement, Mary Kay Bowman, Visa’s SVP and global head of payment and platform products, said the company has been “enthusiastically embracing BNPL” for years “because it expands choice and convenience for buyers and sellers alike.”
“If shoppers prefer a BNPL fintech solution, we are here and enabling it,” she said. “If they want an option from their banks, we’re helping offer those too.” Interestingly, Visa said today it has inked a “global brand deal” with BNPL giant Klarna to accelerate its expansion and scale in several markets.
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