The Potential for New Payment Experiences – A Comparison of Japanese and U.S. BNPL Trends

In our previous article, "BNPL, a New Form of Deferred Payment, and Future Consumption and Payments" (published in June 2022), we discussed the overview of BNPL and future predictions. Now that more than half a year has passed, we would like to explore the perspectives and expectations of key players in Japan to determine whether this new payment method will simply be a fad or become established as a payment method in Japan, considering overseas trends and the needs of affiliated stores and users.

A brief recap of the previous article:
BNPL, which stands for Buy Now Pay Later, differs significantly from traditional deferred payment methods, such as credit cards, in that it does not require prior screening. In Japan, numerous players have emerged, including specialized providers such as Net Protections and Paidy, as well as payment companies like PayPay and GMO Payment Gateway. Internationally, specialized companies such as Klarna, Affirm, and Afterpay are also proliferating. Taking these trends into account, the previous article examined the purchasing behavior of young people, known as Generation Z, and predicted future changes in payment channels. In conclusion, while BNPL is expected to secure a certain share (around 10%), the dominance and share of credit cards and smartphone payments are likely to remain largely unchanged.


Let's examine the changes in the market since the previous article through Google Trends. There are slightly different trends globally and domestically.
First, from a global perspective, the term "BNPL" began to gain traction around August 2021, coinciding with its increasing prominence as a trend. BNPL itself developed alongside e-commerce in the 2000s, but it gained significant attention during the COVID-19 pandemic as the use of online payments surged (more than 1.6 times higher than in 2019 before the pandemic) due to the increased demand for staying at home. As a result, the asset values of international BNPL players also surged sharply. Another global trend worth noting is the sharp rise around June 2022. This surge is thought to be due to a significant decline among existing major players during that period. In response to increased payment delays, there has been a global trend towards stricter regulations on BNPL. Additionally, there was notable buzz about Apple's entry into the BNPL market with its own service. Against this backdrop, Klarna implemented layoffs and downrounds, and Affirm experienced a sharp decline in its stock price.


Meanwhile, in Japan, the timing of the initial increase (around August 2021) was similar to the global figure, but no significant changes have been observed since then.
However, when we look at market players in more detail, we see latecomers entering the BNPL market with a "new perspective" that has keenly captured market issues and needs.


Here are three examples: