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In the last of five reports in our 鈥淧ayments Ecosystem鈥� collection, we look at what鈥檚 influencing retail sales growth across in-store, online, and social commerce channels鈥攁nd what it means for payment providers.

Providers like Afterpay and Klarna ramped up their shopping features ahead of the holidays to capitalize on this spend, and so far, these efforts have paid off. BNPL transactions through Afterpay increased 19% YoY this weekend, per a press release. A lot of this activity took place directly in the Afterpay app: usage was up 16% from last year.

Steep discounts drove shoppers to splurge on Black Friday: Consumers scooped up bargains across several categories, helping online sales jump 14.6% YoY the day after Thanksgiving.

American Express, Chase, and Citi landed the top three rankings for installment plan satisfaction; Sezzle, Afterpay, and Affirm earned the lowest scores. This is all despite the fact that most issuers charge a flat fee to convert transactions into installments, whereas most BNPL fintechs offer plans without any fees or interest.

Retailers are prioritizing unified commerce solutions to help gain a complete picture of their business operations鈥攊ncluding consumer behavior. As the tech landscape becomes more complex, key players are emerging across channels.

Apple鈥檚 credit card, BNPL product, and savings account put it in direct competition with financial services incumbents. With 130.1 million US iOS users loyal to its unsurpassed UX and dominant digital platform, the threat will only grow.

Key stat: 31% of consumers who have already started holiday shopping have used BNPL providers such as Affirm, Afterpay, and Splitit, according to CivicScience. What it means: Flexible payment options may encourage more early holiday shoppers, especially if they are budget-conscious. 3. Brands will continue to be reliant on Amazon to boost discoverability and sales.

From tumbling valuations to the arrival of Big Tech firms, we run down the biggest BNPL developments of 2022.

We look at the trends that will sustain that growth into 2024

Amazon鈥檚 BNPL partners鈥擜ffirm and Citi鈥攍ikely benefited from growing consumer demand for the tool

The company has been beefing up its BNPL capabilities ever since its exclusivity period with Affirm ended earlier this year

Despite delays, Apple can benefit from its extensive user base and merchant acceptance to build BNPL success.

While these consumers are getting access to needed credit, providers must consider the risks of overextension

The service may incentivize more shoppers to pay with the BNPL provider, and it may also bring Klarna key data benefits

The subscription service model is growing in popularity across the payments industry as it provides payment transparency for consumers and a steady stream of revenues for providers

It wants to lean on AI to attract users, while new environmental-focused features should strengthen its brand with younger shoppers.

Financial institutions are vying with nonbanks for customers in a sluggish lending market. Updating their marketing, lending, and product strategies can help attract and keep customers, slowing the outflow to nonbank lenders.

The tech will make it easier for consumers to choose how they pay鈥� boosting the card鈥檚 already strong growth

More than one-third of US consumers plan to spend more this holiday season than last year, according to a Block and Afterpay survey. US holiday sales are projected to reach $1.316 trillion in 2023, per our forecasts. And two-thirds of consumers plan to use BNPL to ease the stress of holiday shopping, per an Afterpay survey, creating a huge volume opportunity for BNPL fintechs like Affirm.

But Splitit is not alone in targeting the in-store BNPL market: Klarna and Afterpay also have offerings. That could make it harder for the firm to stand out as industry leaders also turn from ecommerce to brick-and-mortar shopping. This article originally appeared in Insider Intelligence's Payments Innovation Briefing鈥攁 daily recap of top stories reshaping the payments industry.

Fintechs like Klarna and Afterpay and incumbents entering the market have made it harder for BNPL providers to stand out. But Affirm is still increasing its volume and can benefit from market growth: By 2026, 38.9% of US internet users will use a BNPL solution, up from 30.7% in 2022, per Insider Intelligence forecasts. What next?

Amazon partnered with Affirm to offer 0% APR on holiday purchases during the Cyber Five period, while Expedia is offering BNPL for the first time via Afterpay. The major players: Increased consumer use spells success for BNPL providers. Between January and September, Klarna鈥檚 US gross merchandise volume hit $8.6 billion, growing 92% year over year.

Affirm and Afterpay both shut down their rewards this year. And Affirm now boasts that interest-bearing loans鈥攑reviously anathema to the BNPL conceit鈥攎ake up 73% of its product composition. Affirm also hiked its maximum interest rate to 36% last year, well above the 24.7% national average for credit cards. Anti-BNPL pearl-clutching hasn鈥檛 helped.