Here’s what happened to BNPL in 2022—and what it means for next year

Our take: The popularity of buy now, pay later (BNPL) kept growing in 2022 as consumers sought out more flexible payment methods, merchant acceptance grew, and BNPL spread into new sectors. The total value of BNPL in the US increased 25.5% year over year in 2022, according to Insider Intelligence research.

Here are five trends and events that shaped the BNPL industry this year:

1. The long wait for regulation nears the end. Our prediction that BNPL would come under greater scrutiny in the US proved correct. The CFPB recommended that measures be introduced to protect BNPL users that mirror those applied to credit card issuers. In the UK, the government outlined plans to regulate the sector, and the Financial Conduct Authority (FCA) is taking a tougher stance on BNPL marketing. Other countries, including Australia and New Zealand, are also moving closer to implementing regulation.
2. BNPL providers are diversifying. As competition intensifies, BNPL firms are expanding into industries like healthcare, housing, and grocery shopping. And companies having a harder time accessing credit presented opportunities to expand into business payments. The increased competition has also driven BNPL firms like Klarna to launch non-BNPL products.
3. Banks and payment giants are embracing BNPL. Industry heavyweights like Mastercard, Visa, and PayPal have all gotten more involved in the BNPL market. Lenders like Ant Bank in Asia and Europe’s NatWest and Santander have also launched products to try and grab a slice of the growing market.
4. Apple is readying its own BNPL program. The Big Tech firm’s reach and loyal customer base can help it attract users to Apple Pay Later—if it launches. The product could be especially popular among younger consumers who have embraced BNPL and may already use Apple Pay. Apple’s BNPL debut may worry incumbent providers like Affirm and Klarna, which have yet to turn a profit.
5. Tumbling valuations have rocked the industry. BNPL firms like Klarna and Affirm have seen their valuations slide as market volatility rattles the tech sector. But BNPL specialists may be acutely at risk given their reliance on raising capital to offset difficulties generating profits and the intensifying competition in the market.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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