This UI/UX 2.0 Guide is intended to show the state of Buy Now, Pay Later (BNPL) in the U.S. It should also offer some perspective about why BNPL deserves more attention as a growth channel, why digital and installment payment options are important, and which providers your credit union can trust to give you this capability.
For the purposes of this guide, we define Buy Now, Pay Later as follows:
Buy Now, Pay Later allows consumers to make installment payments on large purchases (typically over $100). Payment intervals, interest rates, fees, purchase limits, eligibility, and the mechanisms by which BNPL work differ from provider to provider.
BNPL is a growing payment trend with a high demand across all demographics. Not surprisingly, the average age of BNPL users skews young at 37 years old. More surprisingly, the average income is around $75,000 annually. Read on for more trends, analysis, and provider ratings.
BNPL Trends and Statistics
Credit unions are divided on the necessity for BNPL, but united around branding and strategy.
A CU 2.0 survey of credit union executives revealed that most respondents had no plans to launch a BNPL platform in the next year.
However, all respondents would prioritize white-label solutions over fintech-branded ones. Similarly, none felt that BNPL would compete with their credit card or loan strategies.
To us, this indicates a clear path forward—all that’s needed is a sense of urgency… one that the following trends may help to create.
BNPL usage is growing fast, and experts predict that growth will continue to accelerate. Here are three growth statistics to watch:
- By 2026, about a quarter of all digital purchases are expected to be made in installments. That number was ~9% in 2021, which itself was a massive increase over the year before it. Without a BNPL option, credit unions will lose these payments to fintechs and competitors.
- U.S. BNPL volume could increase 15x by 2025. In 2020, total BNPL payment volume was $24b. In 2021, that volume surpassed $100b. BNPL use is accelerating fast. More importantly, it’s increasingly common for POS purchases, too.
- 81.2% year over year growth. Previous years have seen BNPL increase by anywhere from 20–50% on average. 2021 accelerated this growth. 2022 built on that trend.
Financial institutions are losing money to BNPL fintechs. In 2021 alone, banks are estimated to have lost about $10b in revenue to BNPL providers. Many major banks introduced BNPL products in 2022. Credit unions have stiff competition from fintechs and banks alike.
Download the full BNPL Guide here! This version is missing a few things…
Buy Now, Pay Later Fintech Ratings
Rating Methodology
CU 2.0’s rating methodology for our early guides is very simple. We measure the potential impact of working with each fintech on two variables: CU Friendliness (how friendly and responsive the fintech is to the credit union) and Member Experience (branding, ease of use, safety, flexibility).
Impact is scored on a scale of 0–3 as follows:
0: N/A or no impact. Competes with credit unions; doesn’t offer relevant services.
1: Minimal impact. Limited partnership opportunities; limited or narrow use cases for members.
2: Moderate impact. Partners with credit unions but may be less responsive due to various factors; provides multiple options for members but may not offer a branded or seamless experience.
3: Major impact. Partners readily or exclusively with credit unions; offers multiple, flexible, and/or configurable options for members.
Our impact ratings don’t necessarily correlate to the quality of a given solution. Fintechs with higher potential impact scores aren’t automatically better, or a better fit, for your credit union and members.
Fintech Ratings
The following fintechs are listed alphabetically. These ratings correspond only to the two listed variables (CU Friendliness and Member Experience). These aren’t ranking of quality, nor are they recommendations—they’re meant only to serve as a starting point in your research to find payment options that suit the needs of your members.
Trusted solutions are highlighted with an asterisk—these are fintechs that CU 2.0 has vetted personally.
BNPL Providers
| Fintech Name | Overview | CU Friendliness | Member Experience |
| Affirm | Affirm is one of the largest BNPL providers in the U.S. Like most on this list, they manage the purchase and then bill consumers for the purchase amount in installments. | 0 | 1 |
| Afterpay | Afterpay was recently acquired by Square (Block), and it’s still one of the leading BNPL providers in the U.S. with over 2,300 major retail partners and counting. | 0 | 1 |
| CO-OP Financial Services | One of the industry’s leading CUSOs, CO-OP, is debuting its Pay-Over-Time Transactions product this year to help credit unions compete against competing fintechs. | 2 | 2 |
| *equipifi | equipifi offers a simple, CU-specific Buy Now, Pay Later option that automatically deposits to and withdraws from member accounts. Their CEO, Bryce Deeney, spent years as VP, Payments at Alaska USA FCU, so you know they know credit unions. | 3 | 3 |
| i2c | i2c is a fast-growing Banking-as-a-Service (BaaS) provider that offers solutions for BNPL, cryptocurrency, card issuing, and more. They’re a larger organization with an extensive product catalog that ranges from BNPL to cryptocurrency cards and more. | 2 | 2 |
| Klarna | Klarna offers merchants and consumers BNPL capabilities, as well as shopping opportunities and a loyalty program (complete with a deposit account and card). | 0 | 2 |
| PayPal | PayPal launched its Pay In Four product recently and provided it for free to all of its existing merchants, quickly making it the largest BNPL provider in the country. | 0 | 3 |
| *Quilo | Quilo enables community banks and credit unions to originate and service instant installment loans through its loan syndication network. These loans can be used for BNPL, debt repayment, or account replenishment after purchases. | 3 | 3 |
| Sezzle | Sezzle is a BNPL provider operating in the U.S. and Canada. They offer installment payments on large purchases and provide shopping with partner brands through their website. | 0 | 1 |
| Splitit | Splitit works differently from the other BNPL fintechs in that it doesn’t require consumers to take on new financing—instead, partnered merchants charge a portion of the purchase price until the item is paid off. | 0 | 2 |
| Zip | Zip (formerly Quadpay) links to a consumer card and provides BNPL payment options through its app. | 0 | 1 |
Please note that these ratings are in their early stages and will be updated as we include more data and more complex variables. The ratings are not definite—your credit union could see a different level of impact than listed in this guide.
Did we miss a fintech? Please let us know at info@cu-2.com
Recommendations
Choosing the right partner will depend on your goals, budget, timeline, and other factors. The shop that works for the credit union down the street may not be the best fit for you.
For deeper discussion, analysis, and recommendations, CU 2.0 can help in the following ways:
- Join our Fintech Call Program. In quarterly 30-minute calls, we’ll discuss in depth new and innovative fintech solutions that fit your credit union’s needs. We can also help you review other solutions you’re looking at.
- Ask for an introduction. We maintain relationships with most or all of the vendors rated above. We would be happy to give you a warm introduction to any we can on the list.
- Book a consultation. CU 2.0 offers technology and fintech consultations and reviews to identify best-fit solutions for your credit union.
