Buy Now Pay Later Poised to Disrupt the E-Commerce Market
In this report, we look at the growth of alternative payment methods, specifically the “buy now, pay later” trend – and what changing consumer preferences tell us about the future of the digital payments space.
Buy now, pay later platforms offer shoppers the option of splitting a purchase into several interest-free installments over a pre-determined period.
- The buy now, pay later trend has taken off around the globe, and is well established in some parts of the world. In Australia, it accounts for about 8-10% of all online sales. In the US, these solutions represent a more than $1.8 trillion opportunity, according to Accenture.
- Companies such as Sezzle and Afterpay have seen robust growth: Afterpay, which launched in Australia in 2014, reported sales of $5.2 billion through its platform in FY19 with 6,500 US merchants currently using the platform.
- Sezzle, which is North America focused and growing even faster than Afterpay, has over 5,800 merchants on its platform since launching in Q3 2017.
- Although merchants generally pay a higher fee to an alternative payment platform than is typical for credit cards, the growth in basket size, increase in conversions and ability to move more inventory at full price often makes up for this added expense.
- These services are growing in popularity, especially among millennials and Gen Zers, who tend to not own credit cards. In the US, just one out of three millennials owns a major credit card, according to a Bankrate survey.