Start profiting now from the surging “buy now pay later” financial subsector

“Buy now, pay later” services are expanding exponentially, driven largely by demographic and social trends. The big payments providers are already paying attention. So should you, says Stephen Connolly

Propel buying clothes
The under-40s are fuelling the BNPL market’s rapid growth
(Image credit: © Getty Images/Image Source)

Make a purchase online these days and the chances are that at the checkout you will be given the option to pay in instalments, often interest-free. The option to buy now and pay later – or “BNPL” – is proving a hit with consumers and retailers. BNPL spending quadrupled to $99bn in the US this year alone and is expected to exceed $1trn worldwide in just four years’ time, according to Bloomberg. No wonder, then, that technology start-ups such as Klarna and Clearpay have been in a frenzy to grab market share. BNPL could be another way for investors to cash in on the ever-evolving boom in e-commerce.

The way it works is relatively simple, which is why it is so popular. Retailers sign a deal to let a BNPL provider appear at their check-out offering its service. If the consumer takes this up, the purchase is made and the retailer gets its money for the full amount, minus a transaction fee, from the BNPL service.

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Investment columnist

Stephen Connolly is the managing director of consultancy Plain Money. He has worked in investment banking and asset management for over 30 years and writes on business and finance topics.