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It will not only affect their payments volume growth, but it could also lead to higher delinquencies for credit card and BNPL providers. But these losses could be mitigated as expected rate cuts start to make paying back credit card debts a bit easier.

These include money management account and credit cards for merchants, as well as buy now, pay later (BNPL) installment and financing options for their customers. Legacy acquirers will respond with evolving payfac solutions. This will help them grow overall transaction value and maintain SMB relationships, which can lead to software sales.

What percentage of buy now, pay later (BNPL) users would be likely or very likely to use BNPL products if they would positively impact credit scores? A) 21%. B) 48%. C) 66%. D) 86%. Nearly nine in 10 (86%) BNPL users would be very likely or likely to use BNPL products if it could help build credit scores, according to a May 2024 survey by TransUnion.

Issuers must provide payment flexibility to compete against buy now, pay later (BNPL) and shifting consumer expectations. US BNPL payment value will see a compound annual growth rate (CAGR) of 14.8% from 2023 to 2027, when it will reach $124.82 billion, per our forecast. This pales in comparison to the $3.466 trillion in credit card spending at food service and retail in 2023.

With the rise of buy now, pay later services and alternative currencies, shopping is more frictionless than ever. These innovations make it easier for consumers to purchase what they need, when they need it, enhancing the overall shopping experience. AI-driven personalization: Advanced AI analyzes consumer behavior and preferences, delivering highly targeted holiday shopping offers.

In 2022, affiliate marketers鈥� interest started to rise in BNPL providers such as Klarna. In 2023, that interest is spiking, thanks in part to US consumers鈥� continued embrace of the technology: Nearly three in 10 US adults will use a BNPL service in 2023, up from less than 1% five years ago.

Further integration of digital proximity payments, including Apple Pay and buy now, pay later (BNPL), along with cashierless checkout, will make transacting easier. The digitization of the store will bring the best aspects of ecommerce into physical retail. Physical retail must adapt to intensifying competition from ecommerce.

BNPL providers will make two changes as the industry transitions to 鈥淏狈笔尝 2.0鈥�:. Leading BNPL providers will try to build super apps. They are leaning into non-BNPL services, including rewards programs, physical cards, noninstallment payment options, and price trackers. Becoming a destination for shopping and financial management can increase engagement and introduce new revenue streams.

For example, 48.1% of Gen Z digital buyers will use buy now, pay later (BNPL) this year, per our forecast. That lessens the urgency for them to open their first credit card account. To see the full forecast, click here. But the good news is that鈥攁s with all generations鈥擥en Z behaviors vary based on income.

They also maybe will spend the money they don't have if we get a rate cut [00:06:00] because they'll be interested in putting things on credit or indulging in buy now, pay later. Sky Canaves: Right. And buy now, pay later is still very strong in the holidays.

Expanded BNPL. Affirm and Zip鈥檚 buy now, pay later (BNPL) options will be available at more merchant sites and Android apps across the US following a December pilot. Consumers can link their BNPL accounts to Google Pay or sign up with either provider within Google Pay鈥檚 checkout. How it can help: Not offering a customer鈥檚 preferred payment method at checkout can hurt conversion rates.

This is especially important for BNPL fintechs as they search for long-term profitability in a historically low-margin business. Dig deeper: Check out our BNPL forecast for more information on where we think BNPL growth is headed in the US. This article originally appeared in Insider Intelligence's Payments Innovation Briefing鈥攁 three-times-weekly recap of top stories reshaping the payments industry.

Expanding into BNPL, for example, could help attract younger users: 50.1% of Gen Zers will use BNPL by 2026鈥攖he most of any generation, per Insider Intelligence research. But flawed systems can prevent banks from integrating BNPL products. Customer acquisition. Banks can improve customer service and product quality if they adopt new payment systems.

The news: Klarna instituted a hiring freeze outside of engineers as the buy now, pay later (BNPL) provider plans to lean more on artificial intelligence (AI) to replace labor, Klarna CEO Sebastian Siemiatkowski told The Telegraph.

Businesses that have already adopted buy now, pay later (BNPL), such as Walmart or Wayfair, will likely be among the first to embrace A2A. Gen Z Breaks Into the Financial Services Mainstream. Gen Z is the new customer鈥攁nd their business must be won today. In 2023, there will be more adult Gen Zers than adolescents for the first time, equaling about half the size of the millennial population.

Continued concern for the economy may cause consumers to rely more heavily on credit cards and buy now, pay later (BNPL) services in the future. Credit card debt in the US totaled $1.12 trillion in Q1 2024, up 13.1% YoY, per the Federal Reserve Bank of New York. Use this chart:. Adjust credit card marketing strategies to boost new credit card openings. Illustrate growth potential for BNPL services.

Where things get a little hazy is the generation鈥檚 reliance on BNPL and their interest in cryptocurrency. BNPL solutions require tracking numerous installment plans with different due dates across each month, for example, versus looking at one or two credit card statements. That means it鈥檚 harder to track their budgets.

Buy now, pay later (BNPL) is gaining steam among consumers while account-to-account (A2A) payments prepare to make a splash. As retailers begin accepting these methods, wallets are increasing their support for them, beginning with BNPL. This extends wallet usage opportunities to transactions where a customer might not want to pay with a card.

Additional features like buy now, pay later (BNPL) and geographic expansion will help sustain Apple鈥檚 growth. Google:. Google relaunched its Wallet app across most markets鈥攊ncluding South Africa, the wallet鈥檚 first move on the continent鈥攖o simplify its global offering and encourage engagement. It also expanded into new areas like cryptocurrency payments through a tie-up with Coinbase.

More than 35 million Gen Zers will use buy now, pay later (BNPL) by 2026. Banks that partner with BNPL companies can get an in with this generation. But Gen Z also uses traditional credit. Gen Zers have an average of $2,589 in credit card debt. This is not quite on par with millennials, but it provides a runway for banks to grow their portfolios with this generation.

Premium travel credit cards need payment flexibility to compete against buy now, pay later (BNPL). Large-ticket travel purchases are ideal BNPL candidates, driving BNPL fintechs to capture slices of US traveler spending. Already, Uplift has forged a partnership with Southwest Airlines, and Affirm has teamed up with online vacation marketplace Vrbo and travel booking platform Agoda.

In the US, PayPal is building out its service suite to include buy now, pay later; crypto; and small-business features, among others. That creates more use cases for the wallet, helping it become a go-to app for a consumer鈥檚 financial services needs鈥攊ncluding P2P.