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Europe Buy Now Pay Later Industry and Trends 2021


SKU: 1524 Category: Tag:
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Countries Covered: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Italy, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden, Switzerland, UK

Pages: 67

Publication Date: 20/04/2021

Questions Covered in the report:

  • How many European merchants offered BNPL services in 2020 during the health crisis?
  • What was the share of cross-border BNPL payments in Europe and Central Asia projected to be in 2025?
  • What was the average customer debt at various BNPL service providers in the UK in 2020?
  • Which BNPL start-ups are going to challenge major BNPL service providers’ in the near future in Europe?
  • What were the top reasons to choose invoice or installment payment methods in different European countries in 2020?

Key Finding:

During the COVID-19 pandemic, BNPL services in Europe grow rapidly: new yStats.com report

European consumers are increasingly opting for BNPL during COVID-19, however, service preferences differ on a country basis

According to figures cited in the new yStats.com report, in 2020, the BNPL service was offered by one-fifth of European merchants, a number looks optimistic for the BNPL service providers when compared to the share of retailers accepting credit cards. In Poland last year, the numbers were above the average, installment and deferred payments were offered by around two-fifth and about one-third of retailers, respectively. Moreover, from the consumers’ side, in Germany, about half of those who are aware of the BNPL option have already used it, and the top expectations of German consumers from the BNPL services were “transparent conditions” and “no interest rate”. This rather high user penetration rate is no surprise, as payments via invoice have been on the German market for a long time, and the invoice payment method is still strongly preferred over installments. Furthermore, the situation looked similar in the neighboring countries: Austria and Switzerland, where invoice payments were among the top three payment methods used for online shopping, and payments in installments closed the rankings. Meanwhile, in the UK, the majority of UK respondents in a November 2020 survey stated that when using BNPL services, they prefer installment payments, rather than paying the full amount later. Moreover, close to two-thirds of UK respondents admitted that BNPL services induced them to spend more, and half of those using the service had missed at least one BNPL payment.

Major BNPL service providers have initiated new projects on the European market during the health crisis

During the COVID-19 pandemic, Sweden-based Klarna, one of the main BNPL service providers, saw its customer base grow rapidly, as more than 20% of its users signed up in 2020. Together with steadily growing revenues, the company initiated new services and further market expansion, which resulted in negative net profits. In June 2020 it expanded its services to Spain and in February 2021 the company announced plans to offer banking services in Germany. Another serious BNPL player, Afterpay, more than doubled its sales, total income, active customer base, and significantly increased the number of connected merchants during the health crisis, according to the yStats report. Meanwhile, PayPal is also eyeing Europe, as in July 2020 it opened its BNPL services for French consumers. Despite the presence of some major BNPL service providers, recently the European region has seen several new players in the BNPL area, with many of them raising significant funds from various venture capital sources and other established companies.

Some regulatory authorities have become concerned about the accelerated activity of BNPL service providers

Consumers worldwide became increasingly attracted to the BNPL services because of the economic disruptions of the COVID-19 health crisis. The increased use of BNPL raised concerns of several governmental representatives, as the regulatory framework for the industry is still quite unclear in many jurisdictions. For example, the European Commission stated plans to update the current consumer credit agreements, considering the BNPL service providers activity; in the UK, the Financial Conduct Authority intends to introduce initiatives concerning the industry this year; and in Australia, where at the behest of Australian Securities and Investment Commission, the Reserve Bank of the country proposed new regulations. The regulators are mainly concerned about overspending by local consumers, and the lack of transparency of terms that BNPL providers apply, as detailed in the yStats.com publication.

1. Management Summary

2. Global Overview

  • BNPL Regulations Overview, March 2021
  • BNPL Trends and Benefits for Merchants, March 2021
  • Breakdown of Payment Methods When Booking a Service Related to Travel, incl. BNPL, in % of Adult Travelers, 2020

3. Europe

  • Share of Cross-Border BNPL, in % of Total Cross-Border BNPL Transaction Value, 2025f
  • Overview of BNPL Startups, incl. Tymit, Montonio, Revo, Zilch, and Alma, March 2021
  • Breakdown of Select Payment Methods Offered by Merchants, by “Growth” and “Non-Growth” Mindsets of Merchants, incl. BNPL, in %, September 2020
  • Breakdown of Credit and BNPL Providers Used, in % of  Respondents, October 2020
  • Share of Consumers Who Would Like BNPL Added to the Credit Card or Current Account, in % of BNPL Users, October 2020
  • Share of BNPL Users who Prefer to Pay via Installments, and in One Later Lump-Sum Payment, in %, October 2020
  • Average Customer Debt, in GBP, by BNPL Service Providers, and by Age Groups, August 2020
  • Average BNPL Time to Pay Back, in months, by BNPL Service Providers, and by Age Groups, August
  • Share of Respondents Who Spent More due to BNPL Option Available, and Share of Respondents Who Missed a BNPL Payment, in %, October 2020
  • Breakdown of BNPL Usage Cases, in % of BNPL Users, August 2020
  • Breakdown of Payment Methods in Online Shopping, in % of the Total E-Commerce Transaction Value, July 2020
  • Breakdown of Payment Methods Used for Online Purchases, in % of Respondents, December 2020
  • Breakdown of Reasons to Choose an Online Payment Methods, in % of Respondents, December 2020
  • Overview of Oney Bank’ BNPL Activity, March 2021
  • Breakdown of Top Requirements to a BNPL provider, in % of Respondents, 2020
  • Breakdown of the Channels of the Last BNPL Payment, and the Potential BNPL Channel, in % of Respondents, 2020
  • BNPL Adoption Rate, in % of Respondents Aware of BNPL, and Breakdown of Respondents Attitude Towards BNPL Usage in the Future, by Consumer Type, in % of BNPL Users, 2020
  • Breakdown of Payment Methods Used for Online Purchases, in % of Respondents, December 2020
  • Breakdown of Reasons to Choose an Online Payment Method, in % of Respondents, December 2020
  • Breakdown of Payment Methods Used for Online Purchases, in % of Respondents, December 2020
  • Breakdown of Reasons to Choose an Online Payment Methods, in % of Respondents, December 2020
  • Overview of BNPL Service Providers, incl. Alma and PayPal, April 2021
  • Breakdown of Payment Methods Offered, incl. Deferred and Installment Payments, in % of Online Retailers, October 2020
  • Top 5 Banks Offering BNPL Financing, by Value, in RUB billion, by Market Share, in % of the Total BNPL Financing Value, and Year-on-Year Change, in %, October 2020

4. Major BNPL Service Provider: Klarna

  • Klarna’s Activity Overview, March 2021
  • Top 10 CNBC Disruptor Companies, incl. Klarna, June 2020
  • Klarna’s Total Net Operating Income, and Net Profit, in SEK thousands, 2016 – 2020
  • Overall Number of Klarna’s Users, and Klarna’s Monthly Active App Users, in millions, 2019 & 2020
  • Terms of Use of Klarna’s Services, incl. Pay in 4, Pay in 30, Pay Now, and Financing, March 2021
  • Share of Klarna’s User Who Ever Missed a BNPL Payment, in %, October 2020

5. Major BNPL Service Provider: Afterpay

  • Afterpay’s Activity Overview, March 2021
  • Overview of Afterpay’s, PayPal’s and CommBank’s BNPL Service, incl. credit check, individual purchase price, max credit limit, Use Cases, Payment Plan, and Late Fees, March 2021
  • Afterpay’s Underlying Sales, Net Transaction Margin, Gross Losses, Total Income, Active Customers, Merchants, FY 2016 – FY 2020, and Year-on-Year Change, in %, FY 2020
  • Share of Transactions via Afterpay that are Paid Back on Time, in %, February 2021
  • Afterpay’s Share of Late Fees, in % of Afterpay’s Total Income, February 2021

6. Major BNPL Service Provider: Affirm

  • Affirm’s Activity Overview, March 2021
  • Overview of Affirms’ Key Financial Metrics, incl. GMV, Total Revenue, Transaction Costs, and Adjusted Operating Loss, Q4 2019, Q4 2020, H2 2019, H2 2020
  • Overview of Affirms’ Key Financial Metrics, incl. GMV, Total Revenue, Transaction Costs, Adjusted Operating Loss, and Weighted Average Shares Outstanding, Fiscal Q3 2021e, and Fiscal 2021f
  • Affirms’s Active Users, in millions, December 2019, June 2020, and December 2020

7. Payment Facilitators Offering BNPL Services

  • Various Facilitators’ BNPL Activity Overview, incl. Stripe, Mastercard, and Shopify, March 2021
  • Share of PayPal Credit’s User Who Ever Missed a BNPL Payment, in %, October 2020
  • Affirm
  • Afterpay
  • Alma
  • Amazon
  • Apple Pay
  • BLIK
  • Clearbanc
  • Divido
  • Google Pay
  • Greensky
  • Klarna
  • MasterCard
  • PayBright
  • PayPal
  • QuadPay
  • Revo
  • Splitit
  • Stripe
  • Twisto
  • Tymit
  • ViaBill
  • Visa
  • Zilch

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