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Traditional BNPL loans from main street banks have relatively been concentrated in installment lending at POS for large ticket, in-store purchases such as furniture, with little coverage of e-commerce merchants. In contrast, PayPal Credit (formerly BillMeLater) Affirm, Afterpay and others were largely born in the e-commerce channel and have begun to migrate to the in-store channel. Fintech startups have also focused on smaller-ticket items, often starting at $99, making them much more accessible to consumers with weaker credit histories and for everyday purchases.
One of the likely reasons for such a broad-based adoption of BNPL has to do with merchant acceptance. Unlike credit cards, most merchants will accept only one or two BNPL brands. In contrast, most online merchants will accept multiple cards networks such as Visa, Mastercard, American Express, etc. According to a 2018 PaymentsSource report on the online BNPL industry, of 132 leading consumer brands selling on the internet, almost all accepted cards from the leading four card networks. In contrast, less than one-third offered a BNPL product and only a handful offered two brands.
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