In The ‘Purchase Now, Pay Later’ Wars, PayPal is Primed for Dominance

The COVID-19 pandemic has currently considerably reshaped how Americans shop, with e-commerce expected to grow 20% in 2020 as a greater proportion of users shift from in-store to online. Due to this transition to higher online shopping paired with the increased financial unpredictability of the American public, Button expects that COVID-19 will also improve how Americans spend their shopping with a similarly significant increase in adoption of “buy now, pay later on” payment programs (BNPL) at checkout.

The greatest limitation to BNPL adoption is its schedule, i.e., whether the seller uses its consumers a BNPL program. Using such a program in the checkout flow does not occur with the flip of a switch. It requires a direct combination of the retailer’s point-of-sale system, which is an onerous procedure, and a meaningful moat for suppliers in place. Leaders in the BNPL field include Klarna, Affirm, Afterpay, and Quadpay– and PayPal made a significant statement in August that it would start offering BNPL services.

In anticipation of this season’s increased adoption of BNPL, mobile commerce platform Button examined our marketplace to comprehend the current state of affairs as it relates to BNPL– the number of retailers includes BNPL programs, which programs are most widespread and how often do the BNPL programs compete head-to-head.

Using Button’s Commerce Intelligence, we evaluated the payment method utilized by customers in our market over the past 90 days. We evaluated nearly 500,000 deals across more than 300 sellers. Secret highlights included:

  • Of nearly 500,000 deals, Button observed 5 available alternative payment solutions: Afterpay, Affirm, Klarna, QuadPay, and PayPal. While PayPal’s payment alternative is not specifically a BNPL choice like the others, we included it in this analysis to highlight the significant structure upon which it can develop its BNPL program relative to its competitors.
  • PayPal had the best merchant protection with the existence of 65% of retailers. Afterpay was a remote second at 10%, then Affirm 6%, Klarna 5%, and QuadPay 2%.