The report "Europe Buy Now Pay Later Industry and Trends 2021" offers a comprehensive overview of the European BNPL industry and market trends. The publication reveals that European consumers are welcoming BNPL providers during the health crisis and this has spurred established providers as well as newcomers to act fast to win market shares.
The European market provides new perspectives for BNPL service providers
As a result of economic disruptions that happened in 2020 worldwide, BNPL services enjoyed special attention both from merchants and consumers. In Europe, the payment option was offered by one-fifth of retailers, and despite the share being not extremely large, compared to the percentage of retailers accepting credit cards, it still looks encouraging.
Moreover, the European market is especially suitable for BNPL services, as their predecessor - payments by invoice - was present on some of the markets for a long time, so that this method becomes a habit of many consumers in Germany, Austria and Switzerland. In these countries, furthermore, invoice payments are still strongly preferred over payments in installments.
Nonetheless, in Germany, close to half of those who were aware of the BNPL payment services in 2020, have already used it, and the top expectation of German consumers from the BNPL services were "transparent conditions" and "no interest rate".
Furthermore, a sampling of UK consumers regarding BNPL options showed that the majority of respondents prefer installment payments, rather than paying full amount later, according to this publication.
Established BNPL service providers will have to compete with newcomers in Europe
In 2020 and 2021, during COVID-19, giant BNPL service providers such as Klarna and Afterpay underwent high growth rates. These players significantly expanded their customer base in Europe, and their revenues soared. Nevertheless, the net profits did not enjoy such growth, as they opted for new projects and further market expansion.
Sweden-based Klarna, in June 2020 expanded its services to Spain and in February 2021 the company announced plans to offer banking services in Germany. Meanwhile, PayPal opened its BNPL services for French consumers in July 2020. At the same time, several local BNPL newcomers attracted significant capital investments during the health crisis, including Alma, ViaBill, Twisto, Zilch, and Revo, according to the report.
Growth of the BNPL practice attracts the attention of government regulators
In many countries worldwide, local payment authorities raised concerns about the current state of the BNLP industry regulations. Often the practice does not fit the definition of traditional loans, which require interest rate payments, so special rules are needed for these services.
For example, in Europe, the European Commission announced the update of current consumer credit agreements to include BNPL service providers and the UK's Financial Conduct Authority is to introduce new regulations in 2021. National and regional regulators are mainly concerned about consumer default issues due to overspending and lack of transparency about the BNPL service conditions, as detailed in the market report.
Report Coverage
This report covers the European buy now, pay later market. The report covers activities of various governments, businesses, banks, and market trends, as well as consumers' preferences and demand drivers.
The following countries were mainly considered in this market report: Austria, France, Germany, Poland, Russia, Switzerland, and the UK. Moreover, the report provides an overview of two major BNPL service providers active in Europe: Klarna and Afterpay. The choice of the companies was based on the number of customers their serve, as well as on the fact that all three have different countries of origin.
The report contains relevant information about regulations, international comparisons, market trends, BNPL adoption rates and usage, consumer preferences, and players. Not all types of information were included for each country, due to varying data availability.
Report Structure
The report starts with an overview of the global overview of regulations applied to the BNPL service providers, BNPL trends and benefits for merchants.
Regional chapter follows the global overview and include information on countries' activities, consumers' attitude towards BNPL services, and other data points.
The market report concludes with the profiles of two major BNPL service providers and their activities during the COVID-19 health crisis.
Key Topics Covered:
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's Key Financial Metrics, incl. GMV, Total Revenue, Transaction Costs, and Adjusted Operating Loss, Q4 2019, Q4 2020, H2 2019, H2 2020
Overview of Affirms's 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
