The total value of Buy Now, Pay Later (BNPL) transactions is set to hit almost a trillion - $995 billion - in 2026, up from $266 billion in 2021.

The study, by UK-based analyst house Juniper Research, said this 274 per cent growth will be fuelled by greater consumer demand for credit to spread costs, because of the pandemic’s financial pressures on consumers.

BNPL transactions will represent 24 per cent of all e-commerce transactions in 2026 according to the research, up from 9 per cent in 2021.

Total BNPL users are predicted to exceed 1.5 billion in 2026, more than four times the 340 million users expected in 2021.

The report argues that e-commerce merchants must integrate BNPL services immediately, or risk losing transactions to other payment platforms which offer preferable payment options.

BNPL faces an uncertain regulatory future in the UK amid political criticism; Labour MP for Walthamstow Stella Creasy described BNPL as the “next Wonga” in January, in reference to a now defunct payday lender which faced significant public condemnation.

In February, the UK government agreed to permit the regulation of BNPL services following the publication of an FCA review on the unsecured credit market.

Juniper’s research argued that “while [BNPL] regulations will inevitably place restrictions on services, such as limiting charges or enforcing affordability checks, these changes will not diminish the appeal or growth of the platforms; merely placing them on a more secure footing.”

The report recommended that vendors focus on improving the transparency and use of credit assessment and reporting now to minimise future disruption.

“As a tool to split the cost for users, BNPL is ideally suited for high cost items, as it enables users to seamlessly split large costs into smaller, more manageable payments,” said research co-author Damla Sa. “By 2026, these platforms will increasingly become the norm for lower-cost purchases as well; driven by user demand and e-commerce platform integrations.”

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