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Adoption of buy now, pay later (BNPL) services continues to accelerate among major retailers and fintech firms. Demand for BNPL payment options has risen tremendously over the last year, leading to heightened investment in the $100 billion dollar industry that could transform payment services as a whole.

While revenue and investment has flowed into the sector, some BNPL companies have begun preparing for heightened regulation. The United Kingdom has announced they will be cracking down on fast-growing BNPL services, and it’s likely additional countries follow suit. While regulation has sparked some fear in the sector, BNPL players are expected to begin self-regulating before these crackdowns occur.

Related Stocks: Affirm Holdings, Inc. (AFRM), Afterpay Limited (AFTPY), PayPal Holdings, Inc. (PYPL), Square, Inc. (SQ)

BNPL Demand Remains Robust Into Q4

Consumers continue to shift towards buy now, pay later services as both retailers and financial institutions strike deals with the alternative payment providers.

MRP recently highlighted increased activity in the BNPL space among digital payment companies as well as e-commerce giants. Demand for BNPL services has only risen further over the last few months as consumers prepare for holiday shopping and turn to payment installment programs.

According to a Consumer Spend Report from BNPL provider Affirm, 56% of Americans are interested in using a pay-over-time solution, for their holiday shopping this year. Of that 56%, nearly 70% said they will use a buy now, pay later service to help keep them on budget, even when they’re able to pay for the item in full. The survey gauged the interest of 2,000 American consumers.

With retailers preparing for a busy holiday shopping season, BNPL providers look primed to strike additional deals and garner further interest from both consumers and businesses.

Per Business Insider, Walmart recently announced it would be completely scrapping its layaway program ahead of the holiday season, replacing it with a buy now, pay later financing option. Walmart, which has been partnered with Affirm since 2019, will now let customers take items home immediately and pay it off later over a three to 24 month period.

Similarly, USA Today reports that Target has added more buy now, pay later options with both Affirm and Sezzle, another BNPL service. The move is another sign that installment plans are increasingly replacing traditional layaway plans, as BNPL services can boost sales, especially when shoppers are currently looking to capitalize on early holiday deals.

Buy now, pay later companies have also garnered significant interest from a slew of financial institutions. American Banker writes that Goldman Sachs, issue of the Apple Card, is now the leader of Apple’s planned BNPL service called “Apple Pay Later”.  Barclays is also jumping on the buy now, pay later trend by working with fintech Amount to develop a BNPL option for its merchant partners starting in April.

Reuters reports that Mastercard has also tapped into the buy now, pay later market as the sector threatens to chip away at the dominance of credit cards. Mastercard announced its new payment program will allow consumers to pay for purchases, both online and in-store, through equal and interest free installments, available in the US, UK and Australia.

BNPL Companies Grow While Threat of Regulation Intensifies

The impressive growth of buy now, pay later companies has yet to show any signs of slowing.

According to FIS Worldpay, BNPL is the fastest growing e-commerce payment method globally, with digital wallets coming in second. Worldpay predicts that the BNPL sector could grow at a compound annual growth rate of 28%, reaching $166 billion by 2023.

Afterpay, which was purchased by Square for $29 billion back in August, has nearly…

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