BNPL credit products value to rise to $576b by 2026: report

For every $100 spent, $2 goes to BNPL transactions in 2021.

More consumers are expected to rely more on buy now, pay later (BNPL) credit products as its global transaction value is projected to reach $576b by 2026, GlobalData reported.

In 2021, the payment service accounted for 2.3% of the global e-commerce market with transaction value reaching $120b. GlobalData noted that during the same period, $2 went to BNPL transactions for every $100 spent.

“The BNPL market will still enjoy high demand and is projected to continue its strong growth,” Arnie Cho, Senior Analyst at GlobalData, said.

“However, smaller BNPL providers may not be able to survive the competition and could end up being acquired by bigger payment providers or banks. Just like the mobile wallet territorial fight, tech companies may well end up dominating the segment in the years to come.”

For instance, in Australia, major banks, such as CBA, WestPay, and ANZ have rolled out BNPL services as early as 2021, whilst the NAB launched theirs in May 2022.

Cho noted the industry will have to brace for headwinds as BNPL providers’ revenue depend on merchant fees, penalties for late payment, and “extremely” low-interest rates on short-term debts.

“With interest rates rising to control inflation and ease the cost-of-living crisis, BNPL providers' costs will increase, putting pressure on already very thin margins from fees and penalties,” Cho said.