2024 is expected to be a pivotal year for the buy now, pay later (BNPL) industry, with projections for substantial growth and expansion. However, amidst the optimism, there are concerns and challenges that industry players will need to address to ensure long-term sustainability and profitability.
According to a new study by Juniper Research, the global transaction value for BNPL is anticipated to more than double in the next four years, reaching an estimated $687 billion by 2028, up from $334 billion in 2024. This growth is expected to extend to new markets, with significant expansion projected for the U.S. and the U.K.
Insider Intelligence/eMarketer forecasts a notable increase in BNPL transaction value in the U.S., with expectations for it to rise from $80.8 billion in 2024 to $124.8 billion in 2027. These figures demonstrate the escalating adoption and utilization of BNPL services among consumers.
However, recent data released by Adobe regarding the 2023 holiday shopping season has raised some concerns. While BNPL spending online during the holiday period surged to $16.6 billion, marking a 14% increase from the previous year, there are indications that a substantial portion of this growth was driven by discounts. This revelation has tempered initial enthusiasm and raised questions about the sustainability of such growth.
Sebastian Siemiatkowski, CEO of Klarna, a prominent player in the BNPL space, expressed caution about the potential long-term impact of artificial intelligence (AI) on employment. Despite the current absence of increased costs and unemployment, he highlighted the likelihood of AI-related job displacement, signaling a need for proactive measures to mitigate potential challenges.
As the BNPL industry continues to evolve and expand, it faces a delicate balance between optimism for growth and caution about the underlying sustainability of this expansion. While the outlook for 2024 appears promising, industry players must remain vigilant and adaptable to navigate the challenges that may arise.
