Buy nowpay-later (BNPL) market estimated to be worth $120 billion in 2021has increased significantly over the past few years. But for much of its rise in popularity for virtual checkouts, BNPL has focused primarily on everyday consumer products like clothing from Urban Outfitters or Peloton. Now the credit method is moving beyond its e-commerce roots.
Large companies have joined the BNPL market over the past few months, also hoping to quickly approve consumers for installment loans.
Notable players such as Mastercard and Visa have launched BNPL services through their respective credit cards; Mastercard also rated that by 2025, a total of $7.2 trillion worth of transactions will be made through BNPL. Recently, Stripe has also partnered with heavyweight BNPL. Confirm offer payment plans to any business on its platform.
But as several large financial services companies look to integrate BNPL into everything, a new fleet of early-stage startups is looking to improve strategy and offer tailored versions of BNPL for specific industries, from healthcare and childcare to groceries and even charitable giving.
While these services can help consumers access costly essentials – in the case of medical bills or childcare – is it really a good idea for consumers to start paying even more in installments?
Kathleen Blume, vice president of consumer behavior research at C+R Research, isn’t so sure. This strategy has been proven to convince consumers spend beyond one’s means and has already pushed some users to duty.
“Many people who use buy now, pay later are demographically less financially secure,” Bloom told TechCrunch. “There really is no good credit check. Do they really know? Do they understand the difficulties with some of them?”
However, this new startup park is a compelling argument as to why they should not be thought of in the same way as the first wave of BNPL startups.
Credit: techcrunch.com /