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Given that the ongoing economic landscape is replete with increased inflation and higher interest rates, Americans are looking for payment modes that help them reduce the cost.
In this scenario, BNPL or buy now, pay later has become a preferred payment option among customers. It allows them to shop without shelling out the entire amount upfront.
Fintech companies are offering this facility to customers not only at brick-and-mortar stores but also for eCommerce purchases.
The BNPL market saw a 230% rise in 2021 compared to 2020, with a spending of more than $20.8B. The number of BNPL users have also increased by more than 300% since 2018 and has reached 45M active users in the US in 2021.
Here are the top BNPL companies in the US that are seizing this immense opportunity.
Founders: Max Levchin, Nathan Gettings, Jeffrey Kaditz, Alex Rampell
Year Founded: 2012
Location: San Francisco, California
Affirm's Monthly Unique Visitors: 1,812,486
Affirm's Order Volume: >50,000
Affirm's Web Sales: $500M - $1B
Affirm is a financial technology company based in San Francisco founded by PayPal founder Max Levchin. It has raised $1.5B in funding and is Amazon's exclusive BNPL partner in the United States through January 2023.
Affirm allows users to take microloans at the point of sale while buying anything online or offline. The tenure of these loans varies from three, six, to twelve months.
Founders: Peter Thiel and Max Levchin
Year Founded: 1998
Location: San Jose, California
PayPal's Monthly Unique Visitors: 35,829,535
PayPal's Order Volume: Not Applicable
PayPal's Web Sales: Not Applicable
PayPal was one of the earliest online payment processing platforms available across the globe. Apart from merchant transactions, it also facilitates person-to-person transactions.
It offers BNPL through Pay In 4, which allows customers to purchase products between $30 and $600. It also enables some users to make purchases up to $1500.
Customers have to pay the loan off in four bi-weekly installments. To use this service, users must have good-standing PayPal accounts.
Founder: Charlie Youakim
Year Founded: 2016
Location: Minneapolis, Minnesota
Sezzle's Monthly Unique Visitors: 450,441
Sezzle's Order Volume: 10,000 - 50,000
Sezzle's Web Sales: $500M - $1B
Sezzle is a BNPL company that also operates in Canada, Germany, and several countries other than the US. It lets customers place orders worth $50-$750 and allows purchases up to $1000.
The Sezzle app requires 25% of the payment upfront and schedules delayed payments twice every three weeks. There is no interest on these purchases, and a free first reschedule option is provided per order—this gives users two weeks of extra time without incurring any cost.
Founders: Nick Molnar and Anthony Eisen
Year Founded: 2014
Location: Melbourne/San Francisco/New York
Afterpay's Monthly Unique Visitors: 1,968,707
Afterpay is an Australian company that operates in New Zealand, the UK, the EU, Canada, and the US.
It now has 20M customers across the globe and entered the US market in mid-May 2018 with retailers such as Anthropologie, Free People, and Urban Outfitters.
Customers using this app can make the first of four equal payments immediately and repay the balance every two weeks.
Founders: Gil Don and Alon Feit
Year Founded: 2012
Location: New York
Splitit's Monthly Unique Visitors: 33,186
Splititis a BNPL company that allows customers to continue using their Visa, Mastercard, Discover, and Union Pay credit cards and earn rewards as they shop. The company has a presence in around 27 countries.
Splitit does not charge consumers any interest or fees, including late fees. It allows customers to choose the number of installments at the POS and does not require any registration either.
The app charges the installment payment to customers' credit cards during the time period selected by the customers. This process is repeated until the customers clear the payment.
Founder: Chris DiMarco
Year Founded: 2012
Location: Philadelphia, Pennsylvania
Perpay's Monthly Unique Visitors: 26,244
Perpay is one of the best BNPL apps for users as it does not check their credit history and allows customers to make purchases depending on their income. It was named the fifth-fastest-growing private company by Inc. Magazine in 2019.
Perpay allows flexibility in the number and frequency of payments at the POS. The biggest advantage it offers customers is that it helps them build a positive credit score.
It does so by reporting the positive payment history to credit bureaus if a customer completers four months of timely payments amounting to at least $200.
Founders: Sebastian Siemiatkowski, Niklas Adalberth, and Victor Jacobsson
Year Founded: 2005
Location: Stockholm, Sweden/Columbus, Ohio
Klarna's Monthly Unique Visitors: 3,868,769
Klarna has an extensive presence in Europe and US and has tie-ups with over 400,000 merchants across 45 countries.
The app allows users to purchase items at the POS by creating a virtual card in the Klarna app. It enables users to select the frequency of payments to complete their purchases.
The company offers several options for repayment—one is to pay off the credit in four equal payments. The first payment is due immediately, and the customer must pay the remaining three every two weeks. Klarna does not charge any interest or fees if the user makes all payments promptly and in full.
The app also allows customers to pay the balance in full within 30 days with no interest. For larger purchases, it provides the option to pay from 6 months to 36 months with interest.
It wouldn't be wrong to say that BNPL is enabling Americans to grapple with the current economic scenario and make purchases while deferring the payments.
It is equipping small and medium businesses to boost their sales despite their limited resources. Most importantly, it is paving the path for a long-term shift away from traditional credit resources.
To glean more insights about BNPL and eCommerce, get a free trial or schedule a demo with us.
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