Square’s unexpected purchase is set to shake up the buy now, pay later (BNPL) space while also opening up cross-selling opportunities for the payments giant, helping it to maintain its edge over top rival PayPal.

The top 3 buy now, pay later platforms

The banking giant will build out its buy now, pay later footprint by creating two key roles within its Marcus direct bank—and its ambitions could add prospects for its upcoming checking account.

This fall, US consumers will be able to use Afterpay’s app to shop at popular retailers even if those stores don’t have a partnership with the BNPL provider, helping it capitalize on a lucrative market and fostering increased customer engagement.

More than 45 million people ages 14 and older in the US will use buy now, pay later (BNPL) services this year, according to our inaugural user forecast for these financing options. That’s up 81.2% over 2020, and the age range of BNPL users will widen over the coming years as well.

Afterpay and Klarna affirm their dominance

For some time now, consumers have been moving toward demanding more frictionless payment methods across online and offline channels. The social distancing and sanitizing practices brought on by the pandemic proved to be the push that encouraged many consumers to try proximity mobile payments (paying for goods using a mobile phone as a physical POS) for the first time. Ecommerce retailers, not to be outdone, are finding ways to improve their transactions as well.

Buy now, pay later (BNPL) services have emerged in recent years as more retailers, including Walmart and Macy’s, began offering consumers financing options when checking out.

After the coronavirus pandemic forced issuers to adapt rewards, enhance forbearance, and build out digital tools to cope with a volume hit in 2020, they’re looking to reimagine their offerings in the future to add new customers and regain primary card status.

Buy now, pay later solutions are quickly gaining adoption as consumers look for new financing options and merchants aim to drive sales. But the industry is still unsettled as a number of firms are battling to lead the space, while card networks and issuers are looking to get involved too.

Digital installment plans are growing in popularity, particularly among more budget-conscious, younger consumers. In the past year, adoption of digital interest-free payment programs grew from 24% in Q1 2019 to 30% in Q3, per data from CivicScience.

Consumers are becoming more cognizant of their spending, some even considering financing high-ticket purchases in an effort to not spend all their money in one transaction.