The ‘A Deep Dive into the BNPL Ecosystem’ report analyzes the rapidly evolving BNPL sector across the world and the factors fueling BNPL payments. Read this report to learn about the drivers, partnerships, business models, regulatory landscape, and future trends impacting the BNPL ecosystem.

1. A Deep Dive into
the BNPL Ecosystem
- Summary

2. | A Deep Dive into the BNPL Ecosystem
Evolution of BNPL
2
In recent years, innovative modes of payments
and lending have taken the FinTech industry by
storm. For the past 2–3 years, especially during
the COVID-19 pandemic, Buy Now, Pay Later
(BNPL)—a new type of financial arrangement—
has been catching up with retail consumers.
BNPL service allows consumers to pay in
installments over time without having them to
pay immediate interest on the purchase instead
of paying the full amount upfront to the seller.
The credit limit provides immediate access to
goods and services without the interest,
revolving around the loan and feeds that come
from POS loans and credit cards. However, the
BNPL credit given to users is not free. BNPL
comes with a catch—late payment fees and
monthly account-keeping fees, among other
charges, add up quite quickly.
Easy access to credit has always been the aim
of the lending industry. Many lending products,
including instant loans and credit cards, have
been traditionally offered to users. What makes
BNPL so popular is the coming together of cell
phones and innovative business models that
leverage new technologies. This mode of
seamless payments provides convenience,
especially while buying retail goods as
unwanted goods can be returned. For retailers,
BNPL has brought in repeat customers who
transact with large ticket sizes. According to
Afterpay’s CEO Nick Molnar, “BNPL has helped
retailers increase conversion rate at checkout,
and in many cases, it has increased as much as
30%.” Owing to the additional benefits provided
by BNPL providers, many retailers have readily
embraced BNPL solutions.
BNPL, a relatively new payment method, still has
a long way to go. Merchants can provide this
service only when consumers have wallet-
friendly payment methods. BNPL's USP is slicing
payments into affordable chunks that can be
repaid over a specified time frame, and this
provides the illusion of affordability. The need
for immediate gratification outweighs the
financial commitment and poses certain
challenges to the payment mechanism, which
we will explore further in the report.

3. | A Deep Dive into the BNPL Ecosystem 3
Infrastructure players such as Mastercard, BharatX, and FIS
have been instrumental to the success of the BNPL
ecosystem. Infrastructure companies that cater to the
particulars of BNPL products have enabled merchants to
provide BNPL solutions with ease. In this section, we deep
dive into FIS, a leading infrastructure company in the BNPL
ecosystem.
FIS and BNPL
The BNPL solutions offered by FIS help merchants grow their
business and enable issuers to compete and scale. Increased
basket size, faster conversions, rise in purchase frequency,
and delightful customer experiences fuel sales for merchants.
Issuers can compete via increased transactions and
transaction amounts, powered by a processor for FI of any
size, new and competitive payment solutions, and
streamlined cardholder experience.
FIS offers a variety of BNPL solutions at different stages of the
consumer purchase journey.
Pre-Purchase
Consumer decides to spread payments for specified dollar
thresholds and spend categories or can arrange automatic
installments for chosen retailers
The FIS BNPL solution is a revolutionary product in the BNPL
ecosystem. Using this solution, an issuer provides a physical
or virtual card linked to an FI’s customer who has an existing
credit or debit card. This pre-approved card can be used as
a funding option at the time of purchase. All transactions
made on the card will use a default installment term set on
the card for three, six, or nine months. Cards can be
managed separately via card controls, allowing consumers
greater control of card use. Financial institutions can
manage transactions eligible for installment processing.
Financial institutions of any size can quickly enter the BNPL
space, maintain and increase transaction volumes, and earn
interest income. Cardholders benefit by leveraging a familiar
payment experience, online or in-store, and expanding their
relationship with their trusted and known financial institution
instead of a third party.
While many FinTechs provide standard BNPL approaches to
consumer spending (checking credit or opening new
accounts at the point-of-sale), this card acts as a fully funded
installment plan card based on a consumer’s credit/debit
relationship with their financial institution.
Infrastructure play in BNPL
The Changing Face of
Purchasing by Cardholders
First to market, FIS
quickly enters the
BNPL space
Variable installment
terms for consumers
FIS-managed
connections for all
BNPL providers
Frictionless BNPL
spending for
cardholders

4. | A Deep Dive into the BNPL Ecosystem 4
Post-Purchase
Consumer offered opportunity to convert a recent card
transaction into installments
With FIS’ post-purchase solution, any financial institution can
easily enter the BNPL payments category. BNPL solutions are
growing in popularity because of the pandemic putting
constraints on consumer spending and the increasing
purchase power of millennials who lean toward more
affordable options. In this scenario, FIS allows an FI to make a
presence in the competitive BNPL category. Offering
cardholders the flexibility of a BNPL option becomes as
simple as automating offers on their regular purchase habits.
Opening a third category of payments, in addition to debit
and credit, for cardholders gives FIs the distinction of
remaining top of mind and helps retain a share of the wallet
through increased transaction volume. For debit clients, the FI
will create a new revenue stream through fees associated
with the BNPL offer. For credit clients, the FI can maintain
cardholder transactions over third-party competitors at the
point of sale.
As a processor-powered solution, an FI of any size can have a
competitive BNPL solution that meets cardholder
expectations via the following:
• Fully automated and digital experience for transaction
qualification, offer, enrollment, and installment
repayment
• BNPL-as-a-Service with a set of cardholder
communication materials included, along with pre-set
transaction qualification settings that can be adjusted at
any time by the financial institution
• Creating a new, flexible payment method—that will
maintain its revenue stream with set fees—for
cardholders
FIS and BNPL
A Flexible New Payment
Option for FIs
Innovative BNPL
Solution for FIs
Streamlined
Cardholder
Experience
Competitive BNPL
Option
BNPL-as-a-Service

5. | A Deep Dive into the BNPL Ecosystem 5
Sector Analysis: Business
Models
| A Deep Dive into the BNPL Ecosystem

6. | A Deep Dive into the BNPL Ecosystem 6
India (33), the US (27), Australia (20), and the UK (11) are hotbeds for BNPL
companies. Despite the mounting debt for BNPL players, regulators have stepped
in to make sure that BNPL flourishes while ensuring that people are not affected
drastically by the easy availability of BNPL. BNPL players in India, on the other
hand, are banking on the rising number of ecommerce shoppers and cheap
internet data, which, in turn, will push Indians to shop online. In such a scenario,
BNPL solutions at checkout would be the most convenient mode of payment. As
per Capgemini Research, 57% of people preferred online shopping due to the
COVID-19 situation in India in 2020, and the number is likely to increase in the
coming months. BNPL adoption in the US has been good, pushing more financial
companies to provide such solutions. In March 2021, 55.8% of US consumers
used BNPL technology—a significant increase from the 37.7% who had reported
doing so in 2020, as per Motley Fool.
Global View of BNPL Products/Services
and Growth in Numbers
Global Heat Map of Open Banking Companies
9
72
44
32
Africa Asia Americas Europe
28
48
65
80
101
129
153
176
0 20 40 60 80 100 120 140 160 180 200
No. of companies
2015
Before 2015
2016
2017
2018
2019
2020
2021
Increase in BNPL providers*
*As of December 2021
*BNPL players (by country) as of December 2021
25
Oceania

7. | A Deep Dive into the BNPL Ecosystem 7
Top BNPL Players across the World
7
*Note : This list is non-exhaustive

8. | A Deep Dive into the BNPL Ecosystem 8
M&A
$29 Bn
$264 Mn
$269 Mn
$104 Mn
$16.3 Mn
NA
NA
NA
$450 Mn
$59 Mn
NA
$28.5 Mn
NA
$2.7 Bn
$2.2 Bn
NA
NA
NA
$50 Mn
NA
$365 Mn
ACQUIRER
ACQUIREE DEAL PRICE ACQUIRER
ACQUIREE DEAL PRICE ACQUIRER
ACQUIREE DEAL PRICE

9. | A Deep Dive into the BNPL Ecosystem 9
Partnerships
FINTECH
FINTECH/BANK/
ECOMMERCE
FINTECH
FINTECH/BANK/
ECOMMERCE
FINTECH
FINTECH/BANK/
ECOMMERCE
*Full List is available in the main report

10. | A Deep Dive into the BNPL Ecosystem 10
Contents
Introduction to BNPL
Evolution of BNPL
Drivers
Debt Trap and Interest Rate
Impact of Covid -19
BNPL sector analysis
Business Models
Regulations: UK, US, Australia, and Sweden
Funding Analysis
Deep Dive into Companies
Mergers & Acquisitions and IPOs
Key Company Profiles
Investors
Partnerships
Future Trends and Conclusion
03
17
27
42

11. | A Deep Dive into the BNPL Ecosystem 11
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