Global spending through buy-now-pay-later schemes is set to reach $995bn (£705bn) by 2026, up from $266bn (£188bn) in 2021, according to a new study from Juniper Research.
The 274% growth will reportedly be fuelled by a “greater appetite” from users for credit to spread costs when purchasing, especially as the pandemic has “put extreme pressure” on user finances.
Juniper Research also found that by 2026, buy-now-pay-later schemes will account for over 24% of global e-commerce transactions for physical goods by value, from just 9% in 2021.
Research co-author Damla Sat said: “As a tool to split the cost for users, buy now pay later is ideally suited for high-cost items, as it enables users to seamlessly split large costs into smaller, more manageable payments.
“By 2026, these platforms will increasingly become the norm for lower-cost purchases as well; driven by user demand and e-commerce platform integrations.”
The research also found that the global number of buy-now-pay-later users will exceed 1.5 billion in 2026, up from 340 million in 2021.
In light of this, Juniper Research said online merchants must integrate buy-now-pay-later services “immediately”, or risk losing transactions to other payment platforms which offer “preferable” payment options.
In addition, it identified that while regulations will “inevitably” place restrictions on these schemes, including limiting charges or enforcing affordability checks, this will not “diminish the appeal or growth of the platforms – merely placing them on a more secure footing”.
The report, entitled ‘Buy Now Pay Later: Vendor Strategies, Regulatory Frameworks and Market Forecasts 2021-2026’, recommends that vendors now focus on improving the transparency and use of credit assessment and reporting now to “minimise future disruption”.