Is buy now, pay later (BNPL) the new normal?

The pandemic rewired how we work, shop, and pay – but not every shift endured. 

Offices are fuller. Revenge travel is displacing the humble staycation. Sourdough starters have gone back to sleep. But one shift has persisted: buy now, pay later (BNPL). 

BNPL has evolved from curiosity to habit. It’s in fashion checkouts and food delivery apps. It’s spread across countries and industries. And as leading BNPL providers, such as Klarna, scale toward public‑market scrutiny and tighter regulation, the BNPL model is maturing, not fading. 

Read on to find out whether BNPL is truly here to stay, and how it can benefit you.

Shoppers are choosing BNPL, and they aren’t going back. Here’s why.

Say you’re eyeing a new mobile phone that costs $2,000. Would you rather pay the full amount all at once, or spread it out into four installments of $500? 

For some shoppers, this could be a matter of affordability. For others, it’s strategic cash flow management. But either way, it boils down to preference.

Here are three key factors influencing the rise of BNPL:

The trust gap between BNPL and credit cards 

Transparency builds trust, and for some, it boils down to how credit cards work. Credit cards might offer rewards that BNPL doesn’t, like cashback and points. But they also charge consumers high interest for late repayments. BNPL, on the other hand, charges the merchant in payment processing fees – not the customer. It’s no surprise that more shoppers are gravitating toward this model that feels fairer by design. 

For younger shoppers, this trust factor is decisive: 59% of Gen Z and Millennial shoppers say they would shop elsewhere if BNPL wasn’t available. For businesses, not offering BNPL could mean losing nearly six in 10 of these shoppers. 

The psychology of smaller, predictable payments 

Morgan Housel, the author of The Psychology of Money, says “... if there’s a common denominator in happiness – a universal fuel of joy – it’s that people want to control their lives. The ability to do what you want, when you want, with who you want, for as long as you want, is priceless.”.

BNPL taps into this need for control and agency. Smaller, predictable payments can make it easier for people to fit a purchase into their mental budget, making it feel more manageable and less daunting.

They can plan their finances on their own terms, choosing when and how they want to pay. This sense of control turns a potentially stressful $2,000 purchase into a manageable $500 one today. Offering BNPL can be a nudge that turns hesitation into conversion. 

It’s simply more affordable

According to a research by The Federal Reserve, 78% of consumers who reported to be “just getting by” or “finding it difficult to get by” financially said BNPL was the only way they could afford certain purchases. These shoppers use BNPL out of necessity. Without BNPL, essentials like a washer, stove, or even a bed might be out of reach for those with financial constraints.

The business case for BNPL

If you’re considering adding BNPL as a payment method, the business case goes beyond shopper preference – even if that’s a large part. Simply, the statistics point to the fact that it’s here to stay. Global BNPL transactions are predicted to grow by 13.7% annually, reaching US$560 billion in 2025 and US$911.8 billion by 2032. 

And it’s not just fashion retailers offering BNPL anymore. Today, even travel agencies, food delivery companies, and healthcare providers have started offering BNPL. For example, airlines and online travel agencies have partnered with Klarna and Zip to embed pay-later options for flights and vacations. 

That means BNPL has gone from a trend to table stakes. Customers expect to see flexible payment methods at checkout, and businesses that offer these will be rewarded by shopper dollars and return customers.

More customers are trusting BNPL

Around the world, 94% of shoppers rank preferred payment methods and transparent pricing among the most important checkout factors, over security accreditation, mobile friendliness, and guest checkout options. BNPL is popular among younger shoppers, and many also see it as a more transparent payment option. If you’re selling cross-border, offering local BNPL options that are familiar to local shoppers can build trust in your brand and drive higher conversions. In fact, offering BNPL can increase conversion rates by 20–30%. 

Shoppers are willing to pay more

When customers only need to pay a small amount upfront, they're more likely to spend more in a single transaction. This measure is commonly known as average order volume, or AOV for short. For example, Melbourne-based print studio Threadheads saw a 25–40% increase in AOV from customers paying with Klarna or Afterpay. Similarly, Hong Kong eCommerce brand Grams(28) saw 20% of sales come through Klarna soon after enabling it. Sydney-based beauty brand Lux Skin recorded a 10% AOV uplift, with BNPL making up 36% of their orders. 

With higher AOV, businesses often see returns that more than justify the higher payment processing fees for BNPL, compared to credit cards. Merchant payment processing fees are typically 5–8% per BNPL transaction, compared to 2–4% per credit card transaction, depending on the provider and region.

Businesses get paid upfront, with less risk

Typically when your business offers a loan, it would take on any fraud or repayment risk – should the customer be disingenuous or default on their payments. But with BNPL, the payment provider takes on these risks, instead of you. After a customer makes a payment, the BNPL provider deducts the processing fees and pays you the purchase amount upfront in full. That means your business gets immediate cash flow without having to chase payments.

The next era of BNPL

BNPL has already changed how shoppers pay, making purchases feel more flexible and affordable. We know that BNPL will continue to grow, but what’s next? Will every purchase eventually be on loan? Could BNPL overtake credit cards? And what about the issues we see today with overspending and debt? While the answers aren’t definitive, early signals suggest BNPL is entering a new era.

Consumer protection is front and center. Governments and financial regulators are sharpening their focus on responsible lending. Around the world, BNPL providers now need to conduct stricter credit checks, disclose terms more clearly (e.g. costs, fees, repayment terms), and hold credit licenses. These rules raise the bar for transparency, ensuring credit is offered responsibly so shoppers stay protected. 

Technology is also set to redefine how providers assess and offer credit. With open banking and frameworks like Financial Data Access (FiDA), providers ‌can use real-time financial data, such as bank statements, income patterns, spending behavior, to tailor installment plans and credit limits that match individual customer needs. Artificial intelligence (AI) will bolster this with credit scoring, fraud detection, and Know Your Customer (KYC) processes. That means we can expect faster onboarding, better risk management, and more personalized BNPL offerings.

All of the BNPLs, none of the Franken-checkout 

So the business case is clear, and you want to offer BNPL. You'll want Klarna in Europe and North America, AfterPay in Australia, New Zealand, the US, and Canada, and Atome in Southeast Asia. The problem is, now you've got a Franken-checkout. The average shopper now sees an appendage of foreign payment options instead of just the one they want.

That's why it's important to ensure that your shoppers only see the local payment options relevant to them.

Offering BNPL globally can be tricky, as each market has its own providers, laws, settlement systems, and consumer preferences. If you’re caught in a web of separate integrations, you’ll end up with slow, confusing, and inconsistent checkout experiences across markets. On top of that, some providers only enable BNPL options for local currency payments. That means you could be losing sales from shoppers who prefer to pay in a different currency.  

That’s why you need to consolidate these BNPL integrations globally, across currencies.

With a single integration on Airwallex, you can start accepting payments with leading BNPLs like Klarna, Afterpay, Atome, and Zip. We go one step further to support cross-border BNPL via Klarna and Afterpay, so you can reach more customers worldwide. We let you show localized pricing to your customers in their preferred currency and unlock region-specific payment methods, including BNPL.

We handle the compliance, integration, routing, and reporting, so you can scale confidently without a Franken-checkout. Instead, you’ll deliver a consistent, trusted payment experience globally. With the right infrastructure, BNPL can be more than a payment method. It becomes a competitive advantage that builds trust and growth across every market.