Buy Now, Pay Later 2022 Trends Recap and Future Forecast

Buy now, pay later (BNPL) services have experienced a massive surge in popularity at the beginning of the pandemic and their prominence has kept growing ever since. The year 2022 was no exception, as consumers continued opting for payment methods that promote flexibility and merchants became even more open to collaborating with BNPL companies.

As a result, the total value of BNPL demonstrated a 25.5% year-over-year increase in 2022 in the US alone. In this overview, you will find a summary of the key tendencies that contributed to this success as well as predictions regarding the foreseeable future of the BNPL services.

5 Trends That Were Shaping the BNPL Industry in 2022

The BNPL niche has seen a lot of changes over the past year. Here is a compilation of the most notable ones:

1. Advancement of Regulations

As of August 2022, there have been more than 150 BNPL providers worldwide offering their services to an estimated 360 million users. Despite these massive numbers, the vast majority of countries didn’t have appropriate legislation in place to regulate this industry until recently, while some are still working on establishing it.

2022 was marked by significant progress in the field of Buy Now, Pay Later regulations. Here are some of the most critical advancements:

• The Consumer Financial Protection Bureau (CFPB) in the US released an 80-page report that covered the topics, such as data harvesting, debt accumulation, and the lack of consumer protection, and announced its plans to establish regulations to address these matters.
• In June 2022, the UK authorities published the official response to the BNPL regulation consultation and outlined their plans for making adjustments in the near future.
• A number of other countries, including Australia and New Zealand, are also moving closer to implementing state-of-the-art BNPL legislation, as they publish documents focused on developing the sector’s future regulatory framework.

All these events are setting a solid foundation for fairer and more secure BNPL services globally.

2. Expanding Scope of Operations

As new BNPL companies keep emerging, the competition increases. Due to this, many service providers in the niche choose to expand their operations and enter such industries as:

• Healthcare
• Grocery shopping
• Housing
• Insurance
• Travel

The high level of competition in the market has also prompted BNPL firms to launch non-BNPL products. One example of such an initiative is Klarna’s price comparison tool which went live in October 2022.

3. Apple’s BNPL Program

Apple is a tech giant with a loyal customer base and global reach. This makes their announcement of launching an in-house BNPL service called Apple Pay Later big news. This project is promising to be particularly popular among younger clients who are already using Apple Pay on a regular basis.

Although the service didn’t go live in autumn 2022 as initially planned, BNPL industry players are already preparing for its postponed launch in spring 2023.

4. Acceptance by Payment Industry Giants and Banks

It took a fair amount of time for big payment industry players and banks to come to terms with the BNPL concept. In 2022, we could finally see industry heavyweights like Paypal, Mastercard, and Visa roll out their solutions for installment payments.

In addition, financial institutions like Ant Bank in Asia and NatWest and Santander in Europe have also hopped on the BNPL trend. Moving forward, we are sure to see even more examples of big payment companies and FIs following suit.

5. Declining Valuations

In 2022, even established BNPL firms like Affirm and Klarna saw a significant valuation fall triggered by increased market volatility. Such times of economic instability affect companies within the Buy Now, Pay Later sector majorly due to their reliance on raising capital and the intensifying competition.

Summing Up: What Does the Future of BNPL Services Look Like?

By 2027, the number of BNPL users worldwide is expected to surpass 900 million people, a 157% increase compared to 2022. This figure demonstrates that industry experts strongly believe in the sector’s ability to continue evolving and being in demand despite all the challenges.

While the year 2022 brought a lot of positive changes to the BNPL industry, it has also emphasized the need for changes when it comes to regulations, the scope of operations, and strategizing. Addressing these issues is expected to be on top of the 2023 agenda for companies working in this field.