With Square set to acquire Afterpay for $29 billion, it’s another marker that buy now pay later (BNPL), while only about 1% of global ecommerce payments today (tens of billions vs. trillions), is growing rapidly, projected to hit 4% by 2025. According to Fitch Ratings, Afterpay has doubled the value of BNPL payments on its platform the last couple of years, while Affirm and Klarna have seen similar growth.
BNPL adoption has caught on more broadly in markets such as Asia and New Zealand/Australia, especially among younger groups, but is certainly poised to catch on here. It’s a way for those without established credit to acquire aspirational items on easy terms, and can be a tool for merchants to fight back against cart abandonment and boost conversions. So, what is the significance of the Square/Afterpay deal, and where is BNPL headed? We spoke with Rob Galtman, a director at Fitch Ratings, to get his take on the acquisition and the trend.
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