It's no secret that credit cards have been around for a very long time now, so what makes Buy Now, Pay Later (BNPL) so unique? What makes it a new solution to an unresolved issue?

According to its name, BNPL is a Fintech solution that allows consumers to purchase items now without having to pay instantly. There are two main differences between it and a regular credit card. In contrast to a credit card, BNPL arrangements often don't charge interest or fees. Second, BNPL providers have a fixed repayment schedule—usually several weeks or months—unlike credit card providers that require monthly payments.

The Coronavirus pandemic accelerated online shopping growth, making BNPL increasingly popular. Let's figure out what it is, and, using examples, we will analyze why this system has become popular.

Buy Now, Pay Later vs. Credit Cards: What's the Difference?

First of all, let’s discuss what BNPL (Buy Now, Pay Later) is. These companies allow customers to make purchases and pay the total amount in installments over time. It is important to note that many BNPL providers do not charge extra fees or interest rates on top of the original payment.

For example, you found the perfect purse, cat condo, or boots but don't quite have the scratch to cover the total cost. The BNPL service lets you spread the cost of your item over a set period of time, usually six weeks, with four payments. There is no hard credit check required for this service.

Even though the customer gets free financing, the merchant pays for that sale, usually 4% to 9.5% of the purchase price, based on the NPR. Therefore, the big question about BNPL arises: why would businesses pay such high rates for sales?

In most cases, the BNPL application will be built into your shopping cart when you purchase for online purchases online. You'll probably need to have an accepted BNPL app installed on your smartphone for in-store purchases.

Missing payments and turning your debt over to collection agencies can lead to late fees from BNPL companies.

According to US federal law, credit cards are equivalent to BNPLs. At the end of your statement period all purchases received at the end of your statement period are subject to a grace period of 21 days before payment is due.

That means you get free baked-in BNPL for at least three weeks, half of the usual BNPL term. Buying at the beginning of your monthly statement period could enable you to get up to seven weeks of no-interest financing.

After that, however, credit cards begin to accrue interest. After that grace period, your annual percentage rate (APR) will start adding interest to your debt if you don't pay off your balance in full. According to Bankrate, the average APR for credit cards as of July 1 is 16.13% or $15 per month on a $1,000 balance.

Credit cards can allow you to track all your purchases in one place. Most online and physical retail stores accept credit cards, but the BNPL services accepted may vary. Last but not least, credit cards offer purchase protections and rewards for spending that BNPL services generally do not.

It depends on your personal situation, the amount of your purchase, your credit history, and the way you typically use your credit card, whether to use BNPL or your credit card.

What is the main driver of BNPL growth?

Generally, BNPL has become popular among gen Z shoppers. They enjoy this system's instant gratification. The percentage of US Gen Z-ers using BNPL has increased 6x since 2019, from 6% to 36% in 2021. As a result, the number of millennials using them has doubled to 41%, while the number of Gen X-ers using them has tripled; even Baby Boomers are now using it.

18-24 61%
25-34 60%
35-44 61%
45-54 53%
54+ 41%

In the past few years, many BNPL providers have emerged, offering everything from clothing to travel to workout equipment. Affirm, Afterpay, Zip (formerly Quadpay), PayPal's 'Pay in 4', and Sezzle are some of the most popular BNPL providers.

Clearpay 16% 25%
Klarna 24% 36%
Laybuy 5% 7%
Openpay 6% 8%
Payl8r 5% 4%
PayPal Credit 73% 65%
Zilch 3% 7%
Zip 4% 6%

Some observers believe BNPL will disrupt the credit card industry and enable those who cannot get credit in the traditional method to take advantage of those benefits. BNPL usage by consumers for Peloton bikes, Nike shoes, and the latest TV grew from $20 billion in 2019 to $24 billion in 2020.

Estimate of buy now, pay later (BNPL) lending in the United States

BNPL revenues are expected to grow from $44 billion in 2020 to over $100 billion in 2024, according to many experts. More experts agree that usage will increase. However, some predict sales will slow as adoption continues to flatten.

According to the Bankrate, the number of overall users of BNPL products is projected to grow to 59.3 million in 2022, with 45% of users claiming BNPL offers better payment arrangements than credit cards.

What are the benefits of BNPL?

Buy now, pay later programs aren't all exactly the same. Each company has its own terms and conditions, but generally, all of them have similar benefits:

  • It’s convenient
    Online stores' checkout processes are fully integrated with buy now, pay later providers, which simplifies the transaction process. When you check out on the online store, you just choose to pay with your BNPL provider instead of your credit card. 
    They’ll sort out the payment plan and email it to you. After you create an account with a BNPL provider, your purchases are almost automatic. With BNPL platforms, you do not need to shop exclusively online.
  • Fast, easy set-up and approval
    BNPL account setup usually takes no more than a few minutes. It just takes a few details, such as your account number, for providers to deduct your payments.
  • Interest-free terms
    Most BNPL providers don't charge interest on the amount you borrow—only late payment fees. You might experience this if you did not have enough money in your transaction account during the scheduled auto charge or by the due date.
  • Spread out payment plans
    It is common for BNPL providers to create a payment plan for you to make it easier for you to adhere to this plan. When they're due, they're automatically charged to the debit or credit card you've chosen. If you don't have enough money in your account, you'll be charged a late fee.

What are the downsides of BNPL?

Using these platforms has some disadvantages:

  • Impulse spending
    Impulse spending may be encouraged by BNPL platforms. Before you've even put a dollar down, you can literally take your purchase home. The temptation can be strong, but so many people buy things they don't need
  • Late payment fees
    Late payment fees are a significant source of revenue for BNPL providers. 
    For instance, one of the services will charge you a $10 late fee. Another $7 is charged if you fail to meet the repayment within seven days from the due date. Missing all four repayments for a $300 purchase, for example, can see you charged up to $68 in late fees.
  • You cannot choose when to make payments
    BNPL providers usually do not allow you to choose the day your payments are due, unlike credit cards or personal loans. As a result, you could end up racking up higher credit card debt, or your BNPL payment might not go through, resulting in you being charged a late fee.
  • Can affect your ability to apply for loans
    So, if you cannot pay for your BNPL loans, your credit rating could be damaged. As a result, it will affect your future ability to get a mortgage, secure a car loan, or even get a credit card. Lenders will consider your BNPL purchases when determining whether or not to grant you a home loan or another loan.

Which countries do BNPL unicorns come from?

Four of the nine present BNPL unicorns were founded in the United States, and one was founded in Brazil. However, BNPL's popularity continues to spread worldwide, with providers like Addi expanding and raising funding.

Australia appears on the list, with statistics showing that by 2028, BNPL's Gross Merchandise Value in the country will reach US$ 52456.2 million from US$ 7354.4 million in 2020. Today the BNPL market is one of the fastest-growing markets in Australia.

Last but not least, BNPL services are also widely adopted in the UK. According to FCA's Christopher Woolard review, the U.K. BNPL market is worth £2.7 billion ($3.7 billion), with 5 million Brits using such products since the pandemic began.

Let’s look closely at the most popular BNPL unicorns by region.

BNPL unicorns by region

BNPL unicorns from North and South America


With Sunbit, you can pay over time for unexpected expenses, from auto repairs to veterinary care. The application process is used by thousands of customers and is designed to approve 90% of applicants. Currently, Sunbit is accepted by over 13,000 merchants. Sunbit has 17 investors, including Harel Insurance Investments and Financial Services and Zeev Ventures. 

5-year search growth 3200%
Year founded 2016
Location Los Angeles, CA
Funding $210M
Alternatives and competitors Uplift, Gopuff, and Lula


Splitit connect card networks, merchants, and customers through "installments-as-a-service". With an approved credit card, customers can pay for their purchases over time without incurring additional interest charges. Splitit has $3T of underwritten credit and has an average review of 4.1 out of 5 stars on Trustpilot. Splitit has 5 investors, including Goldman Sachs Bank USA.

5-year search growth 866%
Year founded 2012
Location New York, NY
Funding $275.1M
Alternatives and competitors Velocity, Covalto, Paystack


Creditas is one of the largest Fintech companies in Brazil currently offering secured loans. There are 27 investors in Creditas, including Andbank and QED Investors. The company announced that it had raised $260 million in a Series F funding.

5-year search growth 366%
Year founded 2012
Location São Paulo, Sao Paulo, Brazil
Funding $1.1B
Alternatives and competitors Finja, Neat Capital, Prospa

BNPL unicorns from Europe 


Klarna is a BNPL platform for eCommerce businesses. Whether paying in person or online, users can split their transactions into four installments. There are 465,000 reviews of the Klarna app on the App Store, with an average rating of 4.8 stars. Klarna closed its last funding round on Jul 11, 2022, from a Venture round. It has 70 investors, including Canada Pension Plan Investment Board and Sequoia Capital.

5-year search growth 178%
Year founded 2005
Location Stockholm, Sweden
Funding $4.5B
Alternatives and competitors Uplift, EBANX, Recharge


Zaver offers two checkout solutions to merchants: Zaver Checkout and Zaver Cashout. Using Checkout, merchants can digitize physical sales and provide quick point-of-sale user experiences even for small cart purchases, reducing checkout friction.

5-year search growth 233%
Year founded 2016
Location Stockholm, Sweden
Funding $8.3M
Alternatives and competitors EBANX, Bondora, Credit Kudos

BNPL unicorns from Australia & New Zeland


With Afterpay, customers can shop from thousands of online and in-store brands. During 6 weeks, customers can pay in 4 interest-free installments without additional fees or interest. More than 10.5 million people use Afterpay, available in more than 100,000 merchants worldwide as of June 2021.

5-year search growth 32%
Year founded 2014
Location Melbourne, Australia
Funding $448.7M
Alternatives and competitors Sezzle, Affirm, Splitit


With Zip, customers can pay in four installments over six weeks without affecting their credit score. With Zip, merchants can integrate the platform in 10 minutes anywhere Visa is accepted. Zip is currently used by over 11.4 million shoppers worldwide.

5-year search growth 75%
Year founded 2013
Location Sydney, Australia
Funding $893.6M (Post-IPO Debt)
Alternatives and competitors Sezzle, Affirm, Klarna, Afterpay

BNPL unicorn from Africa


PayFlex is a South African BNPL payment platform that enables customers to pay in 4 installments. With an Excellent rating from almost 25K customers on Trustpilot, merchants who use PayFlex have boosted their sales by 30%.

5-year search growth 104%
Year founded 2017
Location Johannesburg, South Africa
Funding $500K (Corporate Round)
Alternatives and competitors Bright.MD,

BNPL unicorns from Southeast and East Asia


Hoolah is a Singapore-based BNPL platform makes it possible to splits customers’ purchases into three interest-free installments. Currently living in Singapore, Malaysia, and Hong Kong, customers can make online and in-person purchases. The company partners with retail companies, including Daniel Wellington and Zalora.

5-year search growth 380%
Year founded 2018
Location Singapore
Funding $373.8K
Alternatives and competitors PayPal, PayPal Credit, Affirm, Sezzle

Du Xiaoman Financial

Du Xiaoman Financial was founded in 2015. It is a short-term loans and investment services provider. Investors of Du Xiaoman Financial include the Bank of Tianjin, Bank of Nanjing, ABC International, Baidu, The Carlyle Group, and 4 more. It is also known as Baidu Financial Services Group (FSG), and operates as Baidu’s fintech arm.

5-year search growth 380%
Year founded 2015
Location Beijing, Beijing, China
Funding $4.8B
Alternatives and competitors Mahindra Finance, Klarna, Nordic Capital


A Japanese BNPL platform, Paidy, allows customers to shop online without a credit card or pre-registration. The customer enters their email address, and phone number receives a verification code via SMS, and completes the transaction. In the following month, payments are due by the 10th.

5-year search growth 900%
Year founded 2008
Location Minato, Japan
Funding $397.9M
Alternatives and competitors Afterpay, Affirm, Klarna

What is the future of BNPL?

According to the latest estimates, inflation in the U.S. is currently around 9.1%, similar to the numbers seen at the start of the 1980 recession. As a result of fears of a market downturn, consumers are less likely to use their own money for purchases, instead saving it for a "rainy day." 

The Harmonised Index of Consumer Prices (HICP) rates across EU countries tell a similar picture. With an overall average of 9.8% inflation for the EU, Estonia, Latvia, and Lithuania are experiencing significant inflation, with rates as high as 23.2%, 21.3%, and 20.9%, respectively.

The Harmonised Index of Consumer Prices (HICP) rates

Meanwhile, Malta, France, and Finland are at the lower end of the scale with rates between 6.8% and 8%, making the U.S. far from the exception.

The Harmonised Index of Consumer Prices (HICP) rates

One reason for the growth of BNPL is the numbers on the chart and related panic, but what is causing the market to react in this manner? Is there any hope for the future?

  • Challenges with oil and gas sourcing.
  • Increases in food costs worldwide and fears about shortages.
  • Rises in rent and buying prices for homes, leaving many cut out of the market.
  • Jumps in the cost of materials, such as microchips, among others.
  • Ongoing effects of the Covid-19 pandemic and resulting downturn.

In addition to that. All these factors are currently contributing to the so-called cost of living crisis. A situation like this has left the consumer market shaken and uncertain about whether to spend or save. Consequently, many are forced to take out BNPL loans as a short-term solution.

Should your business consider a BNPL solution?

In the future, BNPL will continue to be a viable and standard payment method whether you shop online, in person, or from anywhere around the world. For many business leaders, it is no longer a question of "if" but "how." With that in mind, it's important to consider what can be gained and what can be lost if you implement a BNPL solution.

BNPL solutions offer consumers increased flexibility by being developed smartly. As a result, BNPL strategies allow for risk management, fairness, equality in product launches, and effectiveness, which means they are profitable for businesses, consumers, and credit providers.

A rushed version could fall victim to common pitfalls, such as unfair charges and credit defaults, increasing business risks. For teams just starting with BNPL, it's best to look at what's worked in the past and adapt it to the future while tailoring the model to their specific needs.

And what should merchants look for when choosing the options to add to their checkout?

In a recent Visa study, nearly half of consumers (49%) say they will use BNPL if it's available through their existing card. 70% of those surveyed said they would use BNPL if they received the same rewards and loyalty points as credit and debit card purchases.

Merchants should be on the lookout for how much emphasis the provider is putting on the customer experience while not taking complete control of that relationship.

BNPL providers will do everything to differentiate themselves by going the extra mile for their merchants and implementing innovative payment solutions. 

An easy onboarding process and seamless integration into merchant websites, like Tamara's, will encourage purchases. In the end, merchants must find BNPL providers that offer a long-term, sustainable approach and are internationally recognized.

The Bottom Line

With BNPL, consumers can get the things they need immediately while also getting more time to pay. But the future of BNPL companies is still in the early innings.

Among our list of top BNPL companies, zero fees and interest payment installments are a major trend. Any company that charges additional fees for using a BNPL service would likely have a negative impact on customers.

Pricing transparency is also a priority for many companies. To reduce customer friction, many feature language about hidden fees or additional charges on their homepage.

The BNPL business model is likely to flourish since these companies offer customers payment flexibility and enable them to make large purchases without paying full price upfront.

FAQ section

What is BNPL?

With Buy Now, Pay Later (BNPL), consumers can make purchases now and pay for them at a later date without incurring interest.

Who are the biggest BNPL companies?

According to a 2022 report from, Klarna and Afterpay have millions of users. Millions of transactions are handled by both companies, which work with tens of thousands of retailers.

Does BNPL help your credit score?

BNPL does not improve your credit score. You won't build up enough credit history with short-term repayment plans for BNPL companies to report to credit bureaus. Late payments won't negatively affect your credit, but they won't build it either. However, some companies offer payment plans to help users build their credit scores.

As names like Klarna, Afterpay, and Affirm wide gain recognition and big, established finance firms like PayPal jump on board, BNPL services are becoming increasingly popular. BNPL is also projected to grow from 2.9% of the global eCommerce transaction value to 5.3% by 2025, according to the 2022 Global Payments Report published by Fidelity National Information Services.

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