This archive report was first published on 22 September 2021.
Published on September 22, 2021, the buy now pay later (BNPL) phenomenon has taken the world by storm, with fintech companies like Square Inc. and PayPal jumping into the fray.
At its core, BNPL allows consumers to purchase products without immediate payment, with the option to pay later in installments. This concept has been around since 2005, when Klarna Bank AB, a Swedish financial service company, revolutionized consumer lending in what was previously known as hire purchase.
Today, BNPL is a global market projected to reach $3.98 trillion by 2030, with the local market in Kenya and other African countries slowly adopting the model. In Kenya, companies like Aspira Finance and LipaLater have emerged as major players in the BNPL space, partnering with retailers to offer consumers the option to buy now and pay later.
However, the adoption of BNPL in Africa is hindered by the integration of various payment systems to the continent's 1 billion-plus population. Most local companies rely on credit reference bureaus, while countries like Kenya are working on centralized data management systems to improve credit data.
The future of BNPL is set to involve Business to Business (B2B) transactions, where companies will be allowed to access BNPL products for their merchandise and let them pay later when consumers actually manage to buy these products.
As the BNPL space continues to disrupt the credit card space, it's clear that this phenomenon is here to stay. With companies like Zip acquiring South African BNPL player Payflex, the market is opening up to transformative ideas that will change the way we shop and pay.
