MarketsDec 4, 2024
Buy Now, Pay Later Firms Snag a Bigger Slice of Holiday Spending — Exciting Investors About Industry Growth
Retail Credit
Noah Weidner
Discover
A quarter of Americans might go into debt to finish their holiday shopping this year — and nearly half of the consumers polled by WalletHub are still paying down last year’s spree. But rather than put it on plastic, shoppers are embracing alternatives like buy now, pay later (BNPL) services — which are thriving thanks to a surge in online holiday purchases.
BNPL booms: According to Salesforce and Adobe online shopping estimates, Americans spent a record amount online this holiday season, and installment payment services captured an equally-record-breaking slice of that spending. Out of the $240.8B+ expected in online holiday sales, $18.5B — or 7.7% — is projected to be financed through deferred payment platforms services like Affirm, Afterpay, and Klarna.
The BNPL industry has come a long way in recent years, partnering with giants like Apple, Amazon, and Adyen — and their rapid growth has prompted oversight from government agencies like the CFPB. However, many of the market’s challenges and big questions linger.
Room for one more? With Affirm controlling about half of the US BNPL market, competition is heating up. Klarna is preparing for a potential IPO in 2025, while Afterpay and newcomers like Shopify’s Shop Pay and PayPal’s Pay in Four have been showing more muscle. As buy now, pay later captures a growing share of holiday spending, the industry’s trajectory has been buzzing — but its ultimate success depends on how it navigates regulatory challenges and increasing competition.
