BNPL 101: What Is It and Why Is It Growing?

BNPL 101: What Is It and Why Is It Growing?

Source: LinkedIn article by Daniel Hall, published August 19, 2025

Over the past five years, Buy Now, Pay Later (BNPL) has transformed from a niche checkout option into one of the fastest-growing segments in consumer finance. Once seen as a modern version of layaway, BNPL is now reshaping how millions of consumers shop and how merchants structure their sales.

But what exactly is BNPL, how does it differ from traditional credit, and why is it growing so rapidly?

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What is BNPL?

BNPL is a short-term financing option that allows consumers to split purchases into smaller, interest-free installments, usually spread over a few weeks or months.

Unlike credit cards, which often carry high interest rates and revolving balances, BNPL typically presents itself as fee-free (provided repayments are made on time). Unlike microloans, BNPL doesn’t require lengthy applications or credit checks; it’s embedded directly at checkout. Unlike traditional layaway, the consumer takes the product home immediately rather than waiting until all payments are made.

The result is a payment method that feels simple, accessible, and far less intimidating than traditional credit products.

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The Key Players

BNPL’s rise has been fueled by both fintech innovators and established payment platforms:

• Affirm (US) – Known for transparency and installment flexibility.
• Klarna (Sweden) – One of the largest BNPL providers, operating in 45+ countries.
• Afterpay (Australia) – A pioneer in the “pay-in-four” model.
• PayPal Pay in 4 – Leveraging PayPal’s vast merchant network.
• Regional players – From India’s ZestMoney to Africa’s PayJustNow, local providers are adapting BNPL to unique market needs.

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Why Consumers Love BNPL

For consumers, BNPL provides:

• Affordability – Breaking large purchases into manageable payments.
• Transparency – Clear repayment schedules with no compounding interest.
• Accessibility – A way to access goods without traditional credit requirements.

For younger demographics (Gen Z and Millennials), who are often wary of traditional debt but demand convenience, BNPL has become the go-to payment method.

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Why Merchants Love BNPL

BNPL doesn’t just benefit shoppers. For retailers, it:

• Boosts conversions – Fewer abandoned carts at checkout.
• Increases basket size – Shoppers spend more per transaction.
• Attracts new customers – Particularly younger consumers who may not own credit cards.

It’s no surprise that thousands of merchants (from small online stores to giants like Amazon, Nike, and Sephora) now offer BNPL at checkout.

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The Growth Drivers

BNPL’s accelerated growth over the past five years has been driven by:

• E-commerce boom – The shift to online shopping created fertile ground for BNPL adoption.
• Pandemic impact – With budgets tight, BNPL became a lifeline for consumers seeking flexible payments.
• Frictionless integration – Instant approvals, seamless checkout, and embedded finance made BNPL hard to resist.

In 2019, BNPL accounted for just a fraction of global transactions. By 2024, it represented over $400 billion in global transaction volume, with forecasts suggesting it could surpass $1 trillion by 2030.

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The Next Five Years

BNPL is moving from trend to fixture:

• Expansion into new markets – Particularly in regions with low credit card penetration, like Africa, Southeast Asia, and Latin America.
• Integration with banks and credit bureaus – Improving risk models and reducing defaults.
• Regulatory frameworks – Governments are introducing guidelines to ensure consumer protection while supporting innovation.
• Financial inclusion – BNPL could bring millions of thin-file and credit-invisible consumers into the financial system, especially when enriched with alternative data.

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Closing Thought

BNPL isn’t just a payment option; it’s a signal of how consumer finance is evolving. Over the next five years, expect BNPL to become deeply embedded in global retail, lending, and even financial inclusion strategies.

For consumers, it offers flexibility. For merchants, it drives sales. For financial institutions, it opens up new models of credit.

The rise of BNPL is only beginning.

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Why This Matters for Ovanti (OVT.ASX)

If BNPL has already reshaped consumer finance worldwide, the U.S. market is where the next major wave of adoption will happen — and the timing could not be better for Ovanti.

Traditional BNPL players like Affirm and Klarna built their models on FICO-driven underwriting, which leaves more than 150 million Americans either under-served or excluded altogether. Ovanti’s AI-powered, cashflow-and-income–based approach fills this gap by extending BNPL access to those who don’t fit neatly into traditional credit boxes.

The article’s growth drivers — e-commerce, shifting consumer preferences, and regulatory frameworks — line up perfectly with Ovanti’s U.S. strategy. By partnering with a major payments processor to immediately access 100,000+ merchants, Ovanti isn’t entering the market to “test the waters”; it’s diving straight into a trillion-dollar sector at the exact moment adoption is accelerating.

This isn’t just good timing. It’s the right product, in the right market, with the right partners — positioned to capture the next chapter of BNPL growth in America.