Market Trends of US Buy Now Pay Later Services Industry
This section covers the major market trends shaping the US Buy Now Pay Later Services Market according to our research experts:
Income of US Households Affecting the BNPL Market
During the COVID-19 outbreak, the US BNPL industry observed a continuous increase with a decrease in the income levels of the country's households. US household income has observed a continuous increase since 2014 from USD 55,613. However, due to the pandemic, the median household income declined from USD 69,560 in 2019 to USD 67,521 in 2021, thus negatively impacting the consumption level of the population and leading to a shift toward BNPL. People with low income and young adults are using BNPL services and are paying the amount through their credit cards. This trend increased due to the growing number of people below the poverty line during the pandemic, from 33.98% in 2019 to 37.25% currently, which is close to the level of 2018.
Increase in Fintech Loans and Credit Market Affecting the BNPL Market
BNPL business originates from consumers and merchants, which is the opposite of the credit card market, where the business originates from banks and credit card companies. BNPL companies as a revenue recovery charge 5-6% of their transaction fee from retailers and merchants. The fee associated with BNPL is mostly greater than the fee associated with credit cards, with traditional credit cards having a processing fee of around 3%. BNPL has a processing fee of 4%. However, BNPL provides customers with the most accessible way of purchasing a product. The BNPL app downloads of major fintech companies observed a continuous increase from 2019 to 2021. However, a decreasing trend was observed in 2022 for firms like Pay Pal, Klarna, Afterpay, Affirm, Zip/Quad Pay, and Sezzle.
