Alex Naughton, CEO and Co-Founder of Qlarifi
The Buy Now, Pay Later (BNPL) sector has undergone a significant evolution. Between 2018 and 2022, the focus was on rapid customer acquisition. Then, providers pivoted toward profitability, refining their models in response to economic pressures. Now, having stabilised financially, BNPLs are set to reignite growth by targeting profitable consumer segments, expand into new markets, embrace data sharing, and explore untapped opportunities in physical retail and B2B services.
Growth will no longer be driven by new customer acquisition alone. Providers are sharpening their focus on high-value customer cohorts and profitable channels. Innovation will take centre stage, with providers tailoring products to specific segments and exploring ways to improve customer experiences.
Global expansion will be a key pillar of this growth. Affirm’s recent entry into the UK is a clear indicator of this trend, and other providers are poised to follow suit across Europe and beyond. Established players are already eyeing new regions, while smaller, agile BNPL companies will target underserved markets where traditional credit remains limited.
Adding to the competitive landscape, banks are preparing to enter the BNPL market. With proven customer bases and cost advantages, banks bring additional credibility and resources to the sector. This shift will intensify competition, pushing existing providers to innovate further and refine their offerings.
Beyond consumer finance, the B2B space presents a significant opportunity. Many businesses still rely on outdated invoicing systems and rigid trade terms, creating inefficiencies that BNPL solutions are well-suited to address. Modernised credit models will improve cash flow for businesses while creating new revenue streams.
Transparency will play a critical role in the industry’s evolution, addressing challenges like loan stacking. Enhanced data sharing and standardised credit reporting across BNPLs will prevent such risks, protecting both consumers and businesses. Furthermore, this will help consumers to leverage their BNPL repayment histories, in the long term improving access to credit products. By leveraging purpose-built infrastructure, BNPL companies can decrease risk and streamline operations, fostering greater trust among consumers and businesses.
Finally, physical retail remains a largely untapped market for BNPL providers. While brick-and-mortar stores dominate global retail spending, adoption in physical retail is low. Companies such as Sunbit in the US and Qomodo in Italy are leading efforts to bring BNPL solutions to in-store purchases, unlocking significant potential. We can expect to see much more of this globally in 2025.
The BNPL sector stands at an exciting moment if it can harness these opportunities. The industry is growing up, and with a renewed focus on profitability, innovation, and strategic expansion, BNPLs are well-positioned to redefine consumer finance and business credit. The coming years will not only determine the winners in this competitive landscape but also shape how neo-credit solutions integrate into everyday transactions worldwide.
