Interview Synopsis

Buy now, pay later update – Klarna, AfterPay, PayPal Credit & others

  • Multi Asset
  • Financials
  • Europe

Buy now, pay later (BNPL) companies have sprung up rapidly in the past few years. Differing from installment plans that generally spread loans over 3-36 months, these newer players instead typically divide the payment into four portions over a couple of months. To explore the development of this industry, current challenges and the longer-term outlook, Third Bridge Forum interviewed a former VP from Affirm Inc.

From COVID-19 to the competitive landscape: what’s new in BNPL?

Some of the key trends affecting this industry include the pandemic shifting more customers to buying online, “which I think plays well to the BNPL space”. One concern raised by the economic uncertainty and rising unemployment resulting from coronavirus was that delinquencies would rise, but “generally speaking, the risk has not really been [realised] as much as people initially thought.”

The three key competitors were outlined, including where they operate and their main differences. Klarna and Affirm both offer installment lending and BNPL, while AfterPay provides only the latter. When asked who the eventual market leader could be, the specialist commented that “my guess is there’s not going to be a winner-take-all market. I think there’s enough room here for multiple winners.”

Turning to regulatory concerns, as long as BNPL operators offer fewer than four installments they are exempt from Regulation Z (a US consumer protection policy). “If Reg Z ever got changed to include BNPL or include instalments that are four payments or [fewer], I think… particularly for AfterPay and Sezzle and QuadPay, there would be a  decent amount of work to make sure they were getting in compliance.”

The typical consumer profile was also examined. Although the former VP believes it is generally used more by Millennials and Gen X, “I think the biggest driver of demographics is really the merchants that you’re partnered with.” In time, it could become more of a generational phenomenon, as the younger cohorts become more used to shopping this way.

To access all the human insights from Third Bridge Forum’s Interview – Buy Now, Pay Later Update – Klarna, AfterPay, PayPal Credit & Others – click here to view the full transcript.

Related Transcripts

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

For any enquiries, please contact