In 2022, Square will leverage this blended ecosystem to add not only BNPL—thanks to its Afterpay acquisition—but also Tidal, predicted to provide direct payments capability for content creators.

Affirm plans to launch a crypto trading feature, and Zip will support some of Adyen’s merchant partners.

Digital players like Affirm, Afterpay, Klarna, and PayPal lead the BNPL space. And even though Mastercard’s program could let these players use its rails, pressure from payments giants could squeeze them and make the space even more competitive, especially in the face of increasing consolidation.

Article: Affirm, Afterpay, and Zip look to maintain momentum despite looming threats. Article: 3 things to know in the payments space.

The Reflect card rewards on-time payments with extended 0% APR in a bid to pull consumers away from solutions like BNPL.

See the latest holiday shopping stories from Insider Intelligence

Afterpay and Klarna affirm their dominance

Making money through ads has gotten harder, so many developers will place bets that consumers are ready to sign up for even more subscriptions and to buy things directly through their apps.

While doubling down on its embedded finance solution puts Younited Credit in competition with the likes of Klarna and Afterpay, the booming ecommerce market in France could also present a lucrative growth opportunity.

In its fiscal Q1, Affirm’s customer and merchant bases increased 124% and 1,468% YoY, respectively—here’s what’s next.

Square: The US-based fintech and business neobank said in August 2021 that it’s seeking to acquire Australian BNPL company Afterpay in a deal worth around $29 billion. Goldman Sachs: The banking giant is teaming up with Apple on an upcoming BNPL offering internally called Apple Pay Later. Klarna: The Swedish BNPL company has savings accounts in its product mix in its home market and Germany.

The launch gives Klarna a first-mover advantage against players like Square (which recently purchased Afterpay) and Affirm—both of which have signaled super app interests. And it strengthens Klarna’s defense against banks, many of which recently entered the BNPL fray and have threatened to scoop up market share from incumbent BNPL players.

Last year, leading players like Affirm, Afterpay, and Klarna accelerated growth by forging major partnerships, increasing in-store reach, and posting massive volume. By March 2021, 55.8% of US consumers had used BNPL technology—up from 37.7% last summer—and top drivers revolved around avoiding credit card debt, per The Motley Fool.

The opportunity: Many BNPL providers have launched banking-related solutions—Klarna and Affirm each introduced their own bank account offerings, and Afterpay recently launched a money management tool. But enabling crypto purchases and trading is a somewhat unconventional move that can help Zip stand out.

Recent efforts by BNPL providers like Klarna, Affirm, and Afterpay to roll out their offering in-store brings the benefits of short-term credit to the more than 80% of purchases that happen in physical retail. As BNPL usage becomes more ingrained and consumers become familiar with using it in-store, retailers that implement and drive adoption in the near term will benefit later in the year.

Note: This article was updated on September 10, 2021 to clarify that Square's deal with Afterpay was announced in August 2021.

The BNPL provider delivered triple-digit growth in gross merchandise volume and active merchants, with CEO Max Levchin highlighting some of the key factors that contributed to growth, like Affirm’s expanded Shopify partnership.

PayPal signed an agreement to buy the Japanese BNPL provider, which can help it gain a stronger foothold in Japan’s budding installment lending market and overall digital payments space.

As the consumer-facing BNPL market heats up, these banks could find success thanks to their strong user bases and acceptance foundations.