Demand for buy now, pay later (BNPL) services is skyrocketing, according to a new report from SkyQuest, an IP focused research and investment bank and accelerator of technology and assets. The report revealed that the demand for these services has grown significantly over the past two years and is slated to increase further over the next decade. 

New data shows that the BNPL market was valued at more than $27 million in 2022 and made up 65 percent of the revenue share of the online segment, rising to more than $32 million by 2023. SkyQuest predicts that by 2031 the market will reach more than $1.2 billion, growing 18.6 percent CAGR (compound annual growth rate). 

With a growing number of e-commerce channels, SkyQuest noted increasing service adoption among millennials in developed economies has driven the BNPL numbers higher. 

The company added that data from the U.S. Federal Reserve shows credit card usage now sits at 21 percent. If U.S. banks consolidate BNPLs on their bank-issued credit cards, they could increase their customer credit limits from $856 billion to $1.27 trillion by 2025, according to SkyQuest.

SkyQuest predicts the point of sale phase will play an integral role in adopting BNPL as it empowers customers to make immediate shopping selections without needing previous approval or credit score assessments, which the company says results in much less friction. 

Companies are seeing an increase in the adoption of BNPL solutions as customers can easily allocate the cost of procurement over a period of time, SkyQuest noted, adding the industry is witnessing increasing adoption of BNPL payment methods as they offer a less complex alternative to credit cards. 

The adoption of BNPL has been driven by consumers’ desire to avoid expensive and cumulative interest rates and deposits. Additionally, the increased costs associated with the treatment of many diseases, such as cancer and chronic heart disease, have driven demand for BNPL services during the forecast period.

SkyQuest noted that as the market innovates and changes, it can redefine how consumers fulfil their future purchasing and financial obligations. With digitization and changing consumer preferences, BNPL platforms have gained wide acceptance in retail sectors including e-commerce and brick-and-mortar stores, SkyQuest said.