Global buy now, pay later (BNPL) purchases reached $120bn (£95bn) last year, an increase of nearly four times the amount spent in 2019, according to new data.
A report from data and analytics and consultancy firm GlobalData revealed that BNPL purchases made up 2.3% of the worldwide ecommerce market last year.
According to the report, payments made through BNPL products in 2019 reached $33bn, showing the massive uptick in the popularity of the service over the last two years.
“This rapid growth was down to an increasing number of merchants accepting these solutions,” said GlobalData payments analyst, Chris Dinga.
“There have been some huge partnerships with ecommerce giants such as Amazon and Shopify, opening up a whole new world of consumers.”
Companies providing BNPL service include Sweden’s Klarna, the UK’s Zilch and Australia’s Afterpay.
While the report’s findings reflect a surge in popularity of the service, the findings for last year come as BNPL firms are gearing up for tighter financial regulations in the UK.
The Treasury and the Financial Conduct Authority (FCA) have not explicitly stated when new regulation for BNPL will come, but it is understood in the industry that consumer protection measures are likely to be enforced over the next few months.
Klarna, the largest provider of BNPL products, has already implemented certain measures ahead of regulatory requirements, a move that could see customers’ credit scores affected if they use the payment method.
Industry analysts have been speculating whether the new regulations will slow the current rapid growth of BNPL.
What is known, however, is that Klarna recently announced the firing of around 10% of its workforce as the company is seeking to prioritise profits during a turbulent time across the entire tech industry.
Klarna is also reportedly seeking a lower valuation for its next funding round. Whether these growth issues at Klarna are a sign of trouble for the wider BNPL market, or simply reflective of macro-economic trends, remains to be seen.