United States Buy Now Pay Later Market Assessment, By Channel, By Enterprise, By Demographic, By End-use, By Region, Opportunities and Forecast, 2017-2031F

United States buy now pay later market is projected to witness a CAGR of 17.48% during the forecast period 2024-2031, growing from USD 52.25 billion in 2023 to USD 189.58 billion in 2031. Several key drivers are pushing the buy now pay later (BNPL) market in the United States to grow significantly. Innovations in the field of payment solutions, including advanced financial technologies, data analytics, and AI-driven credit assessments, continuously improve the efficiency, safety, and user experience of BNPL services. The growing focus on financial inclusivity accelerates this growth, as BNPL solutions create an alternative to traditional credit and thus reach a wider range of customers, including those with narrow or no credit history. Growing demand for flexible, transparent, and user-friendly payment options is driving the market's expansion. Additionally, the rise in regulatory requirements and a consumer protection-oriented approach forces providers to comply strictly with policies, thereby enhancing brand credibility and building consumer trust. Digital disruption of financial services and growth in e-commerce contribute to the drivers in the market through online platforms and digital marketing, providers reach more customers and increase customer engagement.

BNPL allows immediate consumption of goods or services to be offset over time via installments. The facility might come with easy sanctioning processes and could even be interest-free or low-interest if paid within the pre-agreed timeframe. In October 2023, Maurices, one of North America's leading fashion retailers for women, announced its newest partnership with Afterpay, the leader in Buy Now, Pay Later. This partnership will enable an easy way for Maurices' customers to pay for their goods online in four weekly installments, increasing consumer choice at checkout and creating a more frictionless shopping experience.

Surge in E-commerce Platforms Fuels Market Growth

The growth of the market in the United States for buy now pay later services is driven by the rising adoption of online payments in multiple e-commerce sites. Increasing utilization of online payment methods in segments such as banking, health insurance, retail, and consumer goods is leading to a growing global point-of-sale instalment loans market. BNPL transactions are increasing in value due to the increased demand for consumer electronics and health insurance services. Online payment options have been used for a decade due to convenience reasons, changes in consumer behavior, ease of finance, affordable interest rates, simple embedding to e-commerce sites, developed security, successful advertising, and young generation preferences. The trend has taken over the entire way people pay and handle their finances, wherein, BNPL finds its center in this new trend.

In June 2024, Afterpay, one of the leaders in buy now pay later, announced a batch of new brands that will be available for consumers to pay in instalments. Shoppers can choose Afterpay during checkout to shop from Curology, Helzberg Diamonds, Journeys, Rawlings Sporting Goods, and Zenni Optical. As BNPL is growing internationally along with other forms of internet payment methods, its impact will continue to shape the financial landscape. Consequently, due to increasing global growth in e-commerce sales, the point-of-sale instalment loans market has attained major growth opportunities that drive revenue growth in the market throughout the forecast period.

Increase in Consumer Spending to Boost Market Growth

The buy now pay later market in the United States will be pushed to a whole different level as consumers increase their spending. With increased financial freedom, consumers are willing to spend on everyday products and larger purchases. BNPL service is a flexible and appealing option over other traditional ways of making payments, encouraged by increasing disposable incomes, supported by a favorable economic environment. This act in tandem to empower consumers through better budget management. BNPL services answer this need for flexibility, allowing consumers to make purchases and pay overtime without high interest rates. Resultantly, these services have become very popular, hence the growth of the BNPL market and increased application in more areas of retail and services. As of August 2024, spending by consumers was more than two-thirds of the United States economic activity, and it rose 0.5 percent after an unrevised 0.3 percent gain in June.

Large Enterprises Segment to Dominate the Market

Large enterprises dominate the segment of the BNPL market in the United States. A host of retailers and e-commerce players, especially focusing on those businesses with a high average order value, are increasingly offering BNPL options to customers to raise sales and customer loyalty. Large enterprises can invest in advanced technology platforms, thereby engaging in deals and partnerships with leading BNPL solution providers that offer seamless payment options to their customers. They appreciate financial stability and risk management tools that can absorb potential losses related to delayed payments or defaults.

The small and medium enterprises segment is expected to grow in the forecasted period. With the support provided by BNPL providers, small and medium enterprises can offer their customers more options to make payments, thus increasing sales and customer loyalty. BNPL solutions can help smaller and medium enterprises to compete with larger retailers by offering similar payment options without needing to invest heavily upfront in technology and infrastructure, thereby spurring innovation and growth. As small and medium enterprises increasingly adopt BNPL solutions, this will likely accelerate market growth and expand consumer choice.

West Region to Dominate the BNPL Market Share

The West region leads the share of the United States buy now pay later market due to the strong technological ecosystem concentrated around Silicon Valley, California. The region's leading fintech companies and startups are creating an impetus for BNPL service innovation. The large tech hubs tend to promote a more tech-savvy consumer base, which easily embraces any emerging financial technology that includes BNPL alternatives. Early adoption and integration by e-commerce giants, plus the supportive regulatory and investment environment, have further paved the region's leadership in BNPL market. The combination of advanced technology, a progressive consumer demographic, and unprecedented investment has placed the West at the center of the BNPL market dominance.

The Northeast is emerging as the key region in the BNPL market, mainly due to its major financial hubs, such as New York City and Boston. The added advantages that lead to the growth of the region are the high density of tech-savvy consumers and the strong presence of fintech startups. In 2023, American Express announced to buy Nipendo, that works on automation and simplifying business-to-business (B2B) payments. The acquisition marks a key step in the strategy of American Express towards setting up an all-encompassing end-to-end B2B platform with the aim of making business payments simpler and more productive. With the addition of Nipendo, American Express is further expanding its suite of B2B solutions for buyers and suppliers alike through new product development, mergers and acquisitions, and strategic partnerships.

Future Market Scenario (2024 - 2031F)

A host of technological advancements, including improved integrations with e-commerce platforms and enhanced user experiences, will drive further growth.

The ongoing evolution in regulation will continue to shape how BNPL services are extended, emphasizing transparency, affordability, and consumer protection as part of the responsible lending regime.

With consumer demand for flexible payment options continuing to rise, BNPL providers could expect greater mainstream adoption across different demographics and geographies.

Key Players Landscape and Outlook

Major BNPL players have invested intensively in research and development to expand their portfolio of services. Besides developing additional types of BNPL solutions, such services can serve merchants and customers alike. BNPL providers are strengthening their market position and extending their reach through a range of strategic initiatives, including launching innovative product lines that can increase user flexibility and convenience, forming strategic partnerships and contractual agreements with retailers and service providers, and pursuing mergers and acquisitions to consolidate their market presence and leverage complementary technologies or customer bases.

With increasing competition in the BNPL market, there is pressure to offer cheap solutions to retain or expand the customer base. This would mean product development capable of responding to consumer needs by adding value to those consumers by considering inexpensive and easy-to-use aspects. In September 2023, Zip Co. announced that it had entered a strategic partnership with Primer, the unified infrastructure for global payments and commerce, to extend and optimize its payment stack as Zip, further accelerating its growth opportunity in the United States market.