NEW YORKâAs experts debate over how much of a threat buy now, pay later (BNPL) services are to credit cards, one major bank is offering some insights into what it really taking place in the rapidly growing market.
Buy now, pay later services are viewed by credit card issuers as stealing market share from debit cards and cash payments, Morgan Stanley said in a report. But some 75% of the transactions are actually funded out of debit accounts, the report shared.
Moreover, most of the growth that took place in programs that allow four payments to be made on purchases came from customers with marginal credit quality, Bloomberg stated in it analysis.
Global sales using buy now, pay later totaled $93 billion last year with the potential to top $181 billion next year, with such programs estimated to account for 3% of e-commerce in the U.S., according to Bloomberg.