PROFIT
Understanding your customers ' financial needs in the context of your brand is key
Leon Gauhman Elsewhen
LEFT : Alessandro
Hatami RIGHT : Leon
Gauhman
Buy now , pay later ( BNPL ) is arguably the biggest shake-up in consumer finance since the launch of credit cards . A new report forecasts that BNPL will account for $ 438 billion ( 5.3 %) of global e-commerce transactions by 2025 , up from 2.9 % in 2021 , as it becomes the fastestgrowing e-commerce payment method in markets including the US , UK , Brazil and India .
On the surface , this is welcome news for retailers that rely on providers such as Affirm , Afterpay , Klarna and PayPal Credit to persuade consumers to keep spending as the cost of living crisis bites . But there are also dangers for brands that become overreliant on the model ' s easy allure .
Despite the buoyant forecasts , there are growing concerns that the BNPL model could burst . At time of writing , Klarna announced 10 % job cuts amid fears that the next funding round could see its £ 46bn valuation slashed by one third . Klarna attributed the job cuts to factors including the Ukraine war , inflation and a possible recession .
Meanwhile , regulators worldwide are starting to scrutinise leading BNPL players , and retailer brands could get caught up in any subsequent blowback . From June , Klarna started sharing customer borrowing information data with credit agencies before being formally compelled to by the regulators . With consumer credit ratings
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