Europe Buy Now Pay Later Industry and Trends 2021

Europe Buy Now Pay Later Industry and Trends 2021

  • April 2021 •
  • 67 pages •
  • Report ID: 6064507 •
  • Format: PDF
Buy now, pay later services have gained momentum during the pandemic

The latest publication from Germany-based online research firm, “Europe Buy Now Pay Later Industry and Trends 2021” offers a comprehensive overview of the European BNPL industry and market trends. The publication reveals that European consumers are welcoming BNPL providers during the health crisis and this has spurred established providers as well as newcomers to act fast to win market shares.

The European market provides new perspectives for BNPL service providers

As a result of economic disruptions that happened in 2020 worldwide, BNPL services enjoyed special attention both from merchants and consumers. In Europe, the payment option was offered by one-fifth of retailers, and despite the share being not extremely large, compared to the percentage of retailers accepting credit cards, it still looks encouraging. Moreover, the European market is especially suitable for BNPL services, as their predecessor – payments by invoice – was present on some of the markets for a long time, so that this method becomes a habit of many consumers in Germany, Austria and Switzerland. In these countries, furthermore, invoice payments are still strongly preferred over payments in installments. Nonetheless, in Germany, close to half of those who were aware of the BNPL payment services in 2020, have already used it, and the top expectation of German consumers from the BNPL services were “transparent conditions” and “no interest rate”. Furthermore, a sampling of UK consumers regarding BNPL options showed that the majority of respondents prefer installment payments, rather than paying full amount later, according the new publication.

Established BNPL service providers will have to compete with newcomers in Europe

In 2020 and 2021, during COVID-19, giant BNPL service providers such as Klarna and Afterpay underwent high growth rates. These players significantly expanded their customer base in Europe, and their revenues soared. Nevertheless, the net profits did not enjoy such growth, as they opted for new projects and further market expansion. Sweden-based Klarna, in June 2020 expanded its services to Spain and in February 2021 the company announced plans to offer banking services in Germany. Meanwhile, PayPal opened its BNPL services for French consumers in July 2020. At the same time, several local BNPL newcomers attracted significant capital investments during the health crisis, including Alma, ViaBill, Twisto, Zilch, and Revo, according to the report.

Growth of the BNPL practice attracts the attention of government regulators

In many countries worldwide, local payment authorities raised concerns about the current state of the BNLP industry regulations. Often the practice does not fit the definition of traditional loans, which require interest rate payments, so special rules are needed for these services. For example, in Europe, the European Commission announced the update of current consumer credit agreements to include BNPL service providers and the UK’s Financial Conduct Authority is to introduce new regulations in 2021. National and regional regulators are mainly concerned about consumer default issues due to overspending and lack of transparency about the BNPL service conditions, as detailed in the new market report.

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