The buy-now-pay-later (BNPL) industry is booming, but keeping abreast of all the players in the industry is far from easy.
And it’s not getting any easier. Thanks to Covid-19, online shopping has grown in popularity and, as a result, so has the BNPL space.
The BNPL industry is expected to keep growing to be worth $166bn by 2023, according to GlobalData’s thematic research. Looking further ahead, it could even reach a valuation of $3.98tn by 2030, according to Allied Market Research. In other words: it’s time to start taking BNPL businesses more seriously.
“This increase in usage of BNPL payment methods has put providers in a prime position to be considered as much more than a feature, but a business model that the financial ecosystem needs to take seriously and consider how they implement or work cohesively alongside,” Al Lukies, founder and CEO of banking software company Pollinate, tells Verdict.
Despite most of the companies in this sector not making a profit, it’s clear that instalments services is a multi-billion industry. No wonder then that the sector is growing crowded.
Not only are BNPL companies like Swedish quadradecacorn Klarna making headlines, but bigger players like PayPal, Block and, as rumour has it, even Apple are muscling into the sector as well.
So, keeping track of all the different companies in the sector is no mean feat. But don’t worry, we’ve got you covered.
Addi is one of Latin America’s newest BNPL providers. Launched in 2018, the Bogota-based business secured $75m in a Series B funding round in September 2021. Greycroft led the round. While Addi didn’t reveal its valuation, it will use the money to fuel expansion plans in Brazil, Colombia and Mexico. It will face stiff competition from other BNPL industry companies, such as Mexican rival Nelo and other fintech companies peddling their own instalment solutions in the region.
Affirm is a San Francisco-headquartered company. This early entrant into the BNPL industry was founded in 2012 by PayPal’s first CTO and founder Max Levchin together with a small group of fellow co-founders. Affirm is available in the US and all US territories, with a few exceptions. The company went through an initial public offering (IPO) in January 2021. Having inked a partnership with Amazon in August, Affirm delivered a strong fourth quarter for the financial year. Despite announcing a jump in quarterly revenues to $261.8m, Affirm said it was not expecting to make a profit in 2022. Nevertheless, the quarterly result saw Affirm’s shares skyrocket and, at the time of writing, it is trading on the Nasdaq with a $28.9bn market cap.
If there is one big rivalry of note in the BNPL space, it’s that between Klarna and Afterpay. Soon after Klarna entered Australia, Afterpay’s home market, in 2020, the two companies’ CEOs engaged in a very public spat. They essentially accused each other of taking advantage of merchants. There have been few signs that the rivalry has improved since.
Launched in 2014, Afterpay has since expanded to offer instalment services in the United States, New Zealand and the United Kingdom, where it trades under the ClearPay brand. In August, payment processing company Block announced that it had reached a deal to buy Afterpay for $29bn, seemingly pushing the sector towards further consolidation.
In early January 2022, the Bank of Spain approved the deal, meaning the deal is now fully unconditional. Afterpay estimates that the deal is now likely to close on February 1.
Apple may make most of its profits from smartphones, but the iPhone maker has also established Apple Pay as a solid revenue stream over the years. Now it seems as if the iPhone maker may add BNPL services to its fintech solution. In July, several media reports suggested that the Cupertino-headquartered tech giant could soon launch its own instalment solution. It had reportedly explored the idea together with Goldman Sachs. While there hasn’t been much movement on its own solution since, in August Apple announced a new deal with Affirm. The partnership would see them bring a joint BNPL solution to Canada.
To be fair though, Apple had already created a BNPL solution of sorts, at least for its own products. It has long offered customers to divide the price of their purchases into monthly instalments.
New York and Ra’anana-based Behalf was founded in 2011. Unlike the majority of companies on this list, Behalf isn’t focused on consumers and online shoppers. Instead, it’s carved out a niche for itself in the market by providing instalment solutions for businesses in the States. The B2B BNPL business has so far raised a total of $462m from investors like Visa. Its most recent round saw it cash in $19m in venture capital and $100m in debt financing, according to GlobalData.
Biller is one of the newest entries into the BNPL space. The startup was launched in 2021 by former Mollie and Klarna executives. Just like Behalf, Biller is a B2B BNPL provider. Its solution is designed to help smaller firms solve purchasing issues around risk and to boost their cash flow. The Biller solution is built in partnership with Slimmer AI, a European B2B venture studio. The company is headquartered in Amsterdam.
German Billie was founded in 2016 after the founders split from UK-based B2B-financing startup Funding Circle, with Billie founder Matthias Knecht citing “fundamental differences” as the reason behind their exodus. Like Billier, Billie is making a name for itself by providing businesses with the smooth financing options consumers can expect from the likes of Klarna.
What gives Billie an edge is that it has not only launched a service similar to that of the Swedish fintech giant, it has also actively partnered with it. Klarna was one of the investors behind Billie’s $100m Series C round round back in October 2021. The Scandi quadradecorn has also inked a partnership with Billie to integrate its services for its customers. “It’s a game-changer for us,” Knecht recently told Verdict.
Since the launch in 2016, Billie has grown at a steady pace. Picking up a $11.79m Series A round in December 2017 and a $33.79m Series B round in July 2019, according to GlobaData‘s intelligence centre. With the $100m Series C round from October, the company has raised close to $150m in total.
Bumper claims to be something as unique as a profitable BNPL startup. In December 2021, Bumper raised a $12m Series A round and claimed that it had been profitable for the 18 months leading up to the cash injection.
The company provides a way for drivers to finance car repairs and maintenance. Focusing on this segment means Bumper customers normally do big one-off purchases and not repeat shopping solutions like the ones offered by other BNPL businesses like Klarna. Bumper CEO James Jackson told Verdict at the time that this leads to lower default rates.
Following the raise, Bumper is now gearing up to expand outside of the UK and Ireland.
“Already a dominant player in the UK and Ireland, we’re currently rolling out our product in Germany, plan to launch in Spain and the Netherlands in the next three months, and have ambitions to be in every major European market by the end of 2022,” Jackson said.
Commonwealth Bank of Australia
Commonwealth Bank of Australia (CBA) is one of Oz’s biggest banks. So when it announced in August that it would enter the BNPL market, the news turned a few heads. The lender’s new BNPL platform is dubbed StepPay. It will offer eligible customers to split payments into four fortnightly instalments for transactions higher than A$100 ($71.1). As of the announcement, 86,000 customers had preregistered for the service.
UK-based Curve was founded in 2016. The self-described “financial super app” added a BNPL feature to its services in September 2021 – Curve Flex.
The service empowers Curve’s customers to pay later for almost any purchase made at any merchant, from any card, up to a year ago. Curve Flex was announced on the same day as neobank Monzo announced its BNPL service, which was also called Flex. Curve made a point out of saying that it had tested the technology since September 2020 and that it had been accredited by the Financial Services Authority in September 2021.
Curve’s founder and CEO, Shachar Bialick said: “Why settle for a rigid copy when you can have the real thing? Curve Flex is almost certainly the most flexible credit solution in the market. With no limitations on merchants and the ability to accommodate all Mastercard, Visa, and Discover cards, Curve Flex will provide customers with access to easy and affordable credit.”
Mumbai-headquartered ePayLater was founded in 2015. It is part of India’s emerging fintech ecosystem. It offers zero-cost instant credit. The payments provider secured a $10m funding round in September 2021 from Zurich-based Responsability Investments AG, Blue Ashva Capital, Pravega Ventures and others.
humm by Flexifi
humm by Flexifi is a subsidiary of Australia-listed consumer finance company Hummgroup, which was founded in 1988. Since its launch, humm has grown popular in Australia, where it claims to be the third biggest BNPL provider after Afterpay and Klarna. It has also launched its services in New Zealand, Ireland and the UK. It targets customers making larger expenditures of up to A$30,000, enabling customers up to 24 months to pay off the purchase.
Founded in 2015, Kissht claims to be “India’s fastest credit lending app”, despite GlobalData pointing out in recent funding round that it requires a fairly extensive customer information in order to open an account. It also offers BNPL online and in-store for 0% financing on purchases of INR5,000 ($66.6 to INR500,000. Terms range from one month up to 15 months, although longer terms attract interest.
Founded in 2005 by a group of Stockholm School of Economics students, Klarna has clawed its way to the top of the BNPL industry. Klarna raised a $639m SoftBank-led investment round in June to strengthen its position in the market. The raise saw it achieve a $45.6bn valuation, making it Europe’s most highly valued private tech company.
To date, Klarna is available in several European countries, North America, Asia and Australia. While rumours about an IPO have been circulating for years, the Swedish BNPL powerhouse hasn’t made any plans public.
The company is also increasingly marketing itself as an alternative to traditional credit cards. David Sandström, Klarna’s chief marketing officer, told Verdict in a recent interview that one reason for the BNLP sector’s huge expansion over recent years is customers simply having had enough of the raw deal offered by traditional credit card providers.
“Credit card companies have made an astounding amount of money by essentially cheating and taking advantage of people with bad terms and conditions, high rates and extremely disadvantageous interests,” he said “What we’re seeing now is a whole generation abandoning credit cards. Roughly 70% of American millennials don’t have a credit card because they fear them more than they dread death, according to some reports.”
Indonesian BNPL player Kredivo was founded in 2016. It has raised $310m in total over the years, most recently through a $100m debt facility from Victory Park Capital in June. Boasting that it has almost four million customers, Kredivo is now seemingly on the path to become the next BNPL company to go public.
Contrary to several other players on this list that floated via IPOs, Kredivo announced in August that it planned to debut via a special-purpose acquisition company (SPAC) deal with VPC Impact Acquisition Holdings II. The SPAC is sponsored by Victory Park Capital. Kredivo also has plans to expand into Vietnam via a joint venture with family investment office Phoenix Holding.
Kueski is a Mexican startup that provides microloan services to clients. Founded in 2012, Kueski Pay, the startups BNPL service has gained more traction, highlighting the growth of the industry. Today it has almost 1,000 retail partners.
Laybuy was founded by husband-and-wife team Gary and Robyn Rohloff in 2016. The New Zealand-headquartered company has since expanded to the UK and Australia, where it listed on the stock market in September 2020. It is currently trading at a A$127m market cap.
While the Rohloffs started with global domination plans, Laybuy is yet to fully conquer the UK market. In May, the company raised $27m to that end.
“There will be growth beyond the UK but for now all the focus is the UK,” Gary Rohloff recently told RBI.
A big part of its strategy is the recent launch of its virtual card that enables customers to skirt the cumbersome tick-a-BNPL-solution-at-the-checkout routine and immediately get the full benefit of Laybuy’s pay-in-six instalments.
Limepay is another Australian BNPL company to be aware of. Founded in 2016, Limepay offers what it describes as the nation’s only white label BNPL solution. What means is that it allows merchants to slap their own branding on the solution in their shops. So far it has raised $27m in total. While it was planning to go public in 2021, The Age reported in May that those plans could’ve been delayed due to the departure of one of the co-founders and investors growing weary of BNPL providers trying to replicate the success of Afterpay.
Lunar Bank is a Danish neobank. Just like other digital lenders like Chime, Revolut and N26, it has so far made its winnings by providing traditional banking services via its app. However, on the back of its $47.2m Series C funding round in October 2020 Lunar announced plans to launch a BNPL solution of its own. It stayed true to that promise by launching the feature Pay Later in December. While Lunar is certainly not one of the biggest players in the sector, its foray into the BNPL space highlights how many companies recognise the lucrative opportunities of the market.
Payments goliath Mastercard launched its highly anticipated bnpl feature that gives fintechs the opportunity to include instalments in their offering in September.
Mastercard would initially roll out the new service in three markets: the US, Australia and the UK. Mastercard Instalments, as the BNPL service is called, will enable banks, lenders, fintechs and digital wallet companies to offer various BNPL benefits including zero-percent interest and the common pay-in-four-goes model.
“Mastercard is definitely a serious threat for smaller BNPL companies,” Theodore Delimaris, research analyst at GlobalData, told Verdict at the time. “Due to its size and global network of issuers and merchants, it has a clear operational and cost competitive advantage.”
2020 was not a great year for Monzo. The London-headquartered challenger bank struggled during the pandemic. In June, it raised a £60m down round that cut its valuation from £2bn to £1.24bn. Some even speculated that fintech may go bust. The neobank later added new fees and announced a new premium offering to cover its losses. And then on 15 September, Monzo announced that it would target the BNPL sector with its Monzo Flex product offering.
Monzo Flex can be used for online and in-person transactions of more than £30 in value. Specifically, Monzo Flex will allow users to repay what they owe in three instalments. In addition, customers can opt to repay in six and 12 instalments, with interest levied at 19% APR.
Of course, not everyone is optimistic about Monzo’s chances to steal market shares from bigger and more established players in the sector.
“It will be difficult for the bank to take a significant slice of business from the likes of Klarna or PayPal,” Payl8r’s managing director Samantha Palmer said.
Hong Kong-based neobank Mox launched its own BNPL service this summer for its Mox Credit customers. Just like with similar offers, Mox’s “Spilt purchase” feature would enable users to pay off payments in smaller instalments.
Nelo was founded in 2019. The Mexico City-headquartered startup is the latest company muscling itself into the booming Latin American fintech scene. But unlike Brazilian digital lender Nubank or Uruguayan payments processing provider dLocal, Nelo is doing it by joining the BNPL brigade. It is hoping to get the jump on rival firms by being a first-mover in the region. The startup secured a $3m seed funding round to that end in April 2021. Nelo has already signed deals with 45 merchants and has over 150,000 users on its books.
OpenPay is yet another Australian BNPL company. The Melbourne-headquartered startup was founded in 2013. It has carved out a niche for itself by focusing on cash flow management of larger purchases between A$40 and A$20,000 with plans ranging from two to 24 months. It other words; the service is similarly to that offered by humm by Flexifi. Following an abysmal IPO in 2019, OpenPay recovered some of its earnings along the online shopping boom of 2020. It’s currently trading at a $142m market cap.
Founded in 2014, Manchester-headquartered Payl8r is arguably the oldest BNPL provider in the UK. Despite its age, it has yet to become a unicorn. That may change soon. Payl8r raised a £40m debt facility from Conister Bank this summer with the aim to pass the important $1bn mark within the next five years. It’s going to do so by tapping into younger customers’ cravings for new lines lines of credits.
“We are the opposite of banks, we want to help millennials and we do so ethically and responsibly,” Palmer said. “In effect, we’re spearheading the death of the credit card and are proud to provide loans that can pay for the likes of educational courses that can lead to new job opportunities.”
PayPal is another company that has realised the opportunities in the BNPL space. The San Jose-headquartered payment processing provider has spent the past year cutting out a slice for itself in the BNPL market. In August 2020, it launched its own instalments service in the States. It has since rolled out the offering across the pond. In September 2021, PayPal turned up the heat by announcing plans to acquire Japanese Paidy for $2.7bn. The acquisition would see the $338bn company signal, just like Block’s Afterpay deal, that market leaders are now hungry for bigger chunks of a market that has previously been dominated by pure BNPL providers.
Like PayPal, Monzo and Lunar, Revolut is not a traditional BNPL player. The UK challenger bank was founded 2015. In July 2021, it became the UK’s most valued privately owned tech company after raising a $800m funding round at a $33bn valuation. Over the years it has been busy expanding its offering with premium cards, cryptocurrency features and foreign transactions. Now it seems like it might be eying the BNPL space as well, according to CEO Nikolay Storonsky who spoke with the Evening Standard. The features are expected to hit the market next year.
Following the turbocharged growth of the BNPL market, European bank Santander seemingly feared it would miss out. So, in late January 2022, Santander announced that it would launch its own BNPL app named Zinia. Like many other apps on this list, Zinia will enable shoppers to split their purchases over monthly instalments interest-free. It plans to rollout its services across its different markets this year.
Ezequiel Szafir, CEO of Santander’s Openbank online banking division, bullishly claimed that by “the security and trust provided by a large financial group” would be the distinguishing factor that would enable Santander to “become a leader in the buy now, pay later market.”
Italian Scalapay may be a new player in the BNPL space, but it’s already making waves. The Milan-based venture was launched in 2019. It is operating in Italy, France, Germany, Spain, Portugal, Austria, Belgium, the Netherlands and Finland. Despite its tender age, Scalapay raised a $155m Series A round in September at a $700m valuation. It is backed by investors like Tiger Global, Baleen Capital and Woodson Capital.
Sezzle was founded in 2016. Since then, the Minneapolis-based company has listed in Australia and is reportedly planning to follow suit in the US. Despite having the same profitability problems as almost every other company in the sector, investors have taken a shine to Sezzle. Having already expanded to the EU, Oz and Canada, the company also plans on tipping its toes into the Indian and Brazilian market.
“My aim is to go for big opportunities: low cost, low risk opportunities,” Sezzle CEO and executive chairman Charlie Youakim recently told RBI.
Another Indian BNPL provider, Simpl was founded in 2015. Its online checkout provides online stores to offer customers one-click checkouts and BNPL services. It has raised $26.7m to date.
Fintech startup Slice was founded in 2016 but has since become one of India’s youngest fintech unicorn. It claimed the its spot in the coveted $1bn+ valuation club in November 2021 after securing $220m Series B funding round. Tiger Global and Insight Partners co-led Slice’s funding round, with Sunley House Capital, Moore Strategic Ventures, Anfa, Gunosy, Blume Ventures and 8i also participating in the raise.
Founded in late 2019, tabby may be a reasonably new face to the BNPL market. However, as one of the early entries into the Middle East, the Dubai-headquartered company could still make a mark. In August this year, it secured a $50m cash injection from investors like Global Founders Capital and STV. On the back of the raise, it achieved a $300m valuation. In September, tabby was Sharia-approved in the Kingdom of Saudi Arabia. The company claims to have secured partnerships with over 3,000 global companies and SMEs.
In April 2021, Checkout.com led a $110m investment into Saudi Arabian BNPL startup Tamara. The Series A round came on the back of a $6m seed funding cash injection from January. Like the other companies on this list, Tamara gives users access to options like “pay in 30 days” or to “pay in three”. Today it is active in Saudi Arabia and in the United Arab Emirates.
In January, banking software company Temenos announced the launch of its own BNPL banking service. This offering will open up new revenue opportunities for banks and fintechs, help them reach new markets and cement their relationships with both consumers and merchants through alternative credit products.
“In an extremely competitive market, financial services providers need to evaluate new business models to drive revenue,” said Max Chuard, CEO of Temenos. “As the strategic technology provider for over 3,000 banks worldwide, we are committed to empowering our clients to pioneer and adopt those new, profitable business models. Buy-now-pay-later has shown the industry that we can come up with new solutions to old problems. It has challenged the way we think about customer engagement, acquisition and retention. We are very excited to launch this new solution to enable our clients to offer alternative financing that is fast, seamless, and scalable.”
Splitit was founded in 2012 and has established itself as a BNPL venture separate from the pack.
While companies like Klarna and Afterpay lend the customers the full amount of a purchase at the checkout and then allow that purchase to be paid off in instalments, Splitit lets users pay with an existing credit card, holding the full amount on their card and taking an instalment each month. In other words: it uses existing cards to enable shoppers to split payments. The approach enabled it to grow by 307% in 2020 to $11.6m. The company followed up its success by inking a deal for a financing facility from Goldman Sachs in January. The lender committed a investment of up to $150m for a three-year term.
Having grown in the States thanks to its partnerships with Visa, Mastercard and Stripe, Splitit now has eyes on the horizon. It plans to expand further around the globe. In June, it teamed up with Middle Eastern BNPL provider tabby. The partnership will help both companies grow in the region. Splitit is headquartered in New York and it listed on the Australian Securities Exchange in 2019. The company has an R&D centre in Israel and offices in London and Australia.
ZestMoney is another Indian fintech that – much like many other BNPL providers on this list – first saw the light in 2015. ZestMoney claims to be “the largest and fastest growing consumer lending fintech company in India” and that its platform “can meaningfully improve the lives of more than 300 million households in the country, who currently have no access to credit cards or any other formal financing options because of insufficient credit history.” ZestMoney raised $50m from Australian provider Zip in September 2021.
Zilch is a BNPL startup straight out of London. Founded in 2018, the company exited out of stealth in August 2020. It differentiates itself from the likes of Klarna and Afterpay by not being reliant on signing partnerships with merchants before users can tap into its services.
“We bring the buy-now-pay-later experience directly to a client anywhere they like – online, offline, Amazon, eBay, Etsy, Not On The High Street – rather than where we’ve gone and done deals and integrations, because that for me is not the customers’ problem. That’s our problem,” Philip Belamant, founder and CEO of Zilch, recently told Verdict.
The company has achieved a $2bn valuation on the back of its $110m Series C round in October and is currently considering expanding into the States.
Now the founder says the Klarna challenger can claim to be Europe’s fastest growing startup.
“We went from Series A to unicorn in 14 months, which is officially the fastest if you’ve seen any company go from series A to unicorn [in Europe],” Zilch CEO Philip Belamant recently Verdict.
Zip is yet another Australian company making a killing on instalment payments. Launched in 2013, it has, which should be no surprise to anyone by now, listed on the Australian stock exchange. It operates in Australia, the US, the UK, New Zealand, South Africa, the Czech Republic and the United Arab Emirates. It is trading at a $3.95bn market cap.
Founded in 2015, California-based Zebit is yet another fintech on this list having gone public in Australia. It made its debut at $1.58 per share in October, raising $35m in the process. However, the price fell by 34% on the day to $1.17. While it did enjoy a surge in March 2021, the price has fallen since. It’s currently trading at $0.8, giving it a $75.6m market cap.