In the BNPL Future, Everyone is a Lender

Ask a young person the last time they used cash, or even a physical credit card, to make a purchase and you’ll likely be surprised. In the last 18 months, digital payments have exploded in the United States, following similar trends already established in Asia, Europe and Latin America. Consumers, especially young millennials and Gen Z, have quickly embraced contactless payments, instant money transfer, and single-use digital credit cards. Fintechs like Stripe, Plaid, and Venmo have enabled a whole new world of digital payments, and one type of digital payment that has particularly surged in popularity is buy-now-pay-later, or BNPL.

Other large fintechs, like Affirm, Klarna, Sezzle, and Afterpay, recently acquired by Square, as well as many other startups, have made BNPL increasingly commonplace for consumer transactions. BNPL infrastructure providers enable retailers to offer lines of credit to shoppers at the point of sale so they can buy products on installment at zero or very low interest. BNPL is convenient for people without credit cards or who want to avoid the hefty fees charged by credit card companies.

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