While many industries experienced a dramatic downturn during the pandemic, the Buy Now, Pay Later (BNPL) industry is seeing quite the opposite. A study performed by Coherent Market Insights reveals that the international BNPL market had been valued at around $7.3 billion back in 2019. However, this nascent market is now projected to reach about $33.6 billion during 2027, growing at an annual rate of approximately 21.2%.
BNPLs allow online retailers to sell their products to customers who prefer to pay in installments. Due to factors like economic stress, a digital boom, and COVID-related job losses and pay cuts, BNPLs are uniquely positioned to take advantage of the current situation as more and more people look for inventive ways to stretch their dollar. Furthermore, this growth poses both an opportunity and a challenge to the industry; as businesses team up with BNPLs, BNPLs experience a greater responsibility to only provide their services to verifiable partners.
Competition Heats Up
According to Forbes, online shopping was up by 77% to $82.5 billion. The effects are seen in BNPL companies like Klarna and Afterpay whose valuation tripled to $31B in 2020. Afterpay, an Australian based BNPL processed around $11 billion in retail sales last year and Affirm, another BNPL company based in San Francisco, processed around $6 billion in retail sales last year.
However, major players in the industry such as Afterpay (1.5M monthly users) and Klarna (12M monthly users) still face a strong competitor: Paypal. The retail giant maintains over 65% of retail space compared to Afterpay’s 10%, Affirm’s 6%, Klarna’s 5%, and QuadPay’s 2%.
For payments providers, having a smooth onboarding funnel is key. Too much friction in the identity verification stage of the onboarding process can cause users to abandon ship, but too little could be problematic and open doors to fraud. Global Data Consortium quietly solves this issue with real-time identity verification.
Stay One Step Ahead of Fraudsters with Electronic Identity & Business Verification
Identity theft complaints in Australia involving BNPL doubled last year, creating a new record. The opportunity for fraud is high in this industry as it can come from both ends: customers can use false identity information while illegitimate business partnerships can scam the BNPL. Because BNPL companies facilitate the credit to these clients, they need to ensure they are doing everything they possibly can to protect themselves from such fraudsters.
GDC‘s electronic identity verification solution and brand new business verification offering can tackle these issues from all sides to ensure that only legitimate, verifiable clients can engage with BNPL companies. GDC’s global reach is built to grow with the BNPL industry as it continues to reach new milestones and expansion goals.