Fintech North America Paytech South America Weekend Read

The Buy Now Pay Later Boom Hits the USA and Latin America

Buy Now Pay Later (BNPL) has taken the payments industry by storm in the last couple of years. Whilst the new payment method originally took off in Europe, it has slowly sept into the US market as startups, like Affirm, have gone public and found success, and Square, the San Francisco based financial services and digital payments company, bought Australia’s Afterpay in $29billion deal, to benefit off BNPL’s growth. Alongside Visa, PayPal and more, Mastercard has become the latest company to announce a BNPL offering.

The credit card giant announced on Tuesday “Mastercard Installments” for US, Australian, and UK markets, offering consumers a 0% interest, pay-in-four-instalments model that’s similar to the rest of the BNPL players in the industry.

As more established companies like Mastercard get into this space, by launching new products, through partnerships, or via acquisitions, “we do expect that buy now, pay later will become ubiquitous, just given the utility that it’s demonstrated over the last year or so,” Mark Palmer, an analyst at BTIG, said in an interview with Yahoo Finance. “I believe it’s inevitable that ubiquity is the endgame… what we’re seeing now is just another step in that direction.”

Mastercard’s BNPL product will be available in the first quarter of next year, with plans to scale the program to other regions and markets through 2022. Users will be able to use the BNPL service at more than 70 million merchants through their lender’s mobile banking app or through instant approval during checkout, according to Mastercard. Pre-approved instalments can be used directly on a company’s website and can also be stored in digital wallets.

BNPL users will also have consumer protections embedded in the product, such as zero liability fraud protection and the ability to challenge unrecognized claims.

Mastercard will work with Barclays US, Fifth Third, FIS, Galileo, Huntington, Marqeta, SoFi, and Synchrony in the US, and with Qantas Loyalty and Latitude in Australia on the BNPL program.

Chiro Aikat, executive vice president of products and innovation at Mastercard, predicted that the company expects BNPL to gain market share of the payments space from 2.1% in 2020 to 4.2% in 2024.

The ‘increasingly blurry’ line between BNPL and credits cards

Bank of America analysts previously noted that the BNPL model is “attacking and disrupting the traditional credit card business.” And while the amounts spent are comparatively smaller, “the sector is rapidly gaining share.”

“Buy now, pay later represents an interesting alternative to using credit cards, particularly for those who don’t have access to credit or [are] simply not interested in using credit cards,” Palmer said.

The BNPL market is getting increasingly crowded as more established names are trying to gain a deeper foothold in the emerging BNPL payment model. Visa, for instance, offers a similar service to Mastercard.

In August, Square announced a giant $29 billion deal to buy Australian BNPL operator AfterPay. Amazon also entered the space by partnering with Affirm, an American player.

Mastercard’s entry into the space, the “line between credit cards and buy now pay later is getting increasingly blurry,” Ted Rossman, a senior industry analyst at, said in a statement.

Rossman added that BNPL “is poised for another banner holiday season, extending the eCommerce gains from last year and pushing deeper into the in-store experience.”

BNPL expansion into Latin America

The US is not the only country that is beginning to see the appeal and use of BNPL. Companies throughout Latin America are also capitalising on this desire to pay at a later date, with Bogota based Addi, being the latest to expand.

Addi has raised $75million in an extension f its Series B funding round led by Greycroft.

GGV Capital, Citius Capital, and Intersection Growth Partners, Andreessen Horowitz, Citius VC, Foundation Capital, Monashees, and Quona Capital all joined the extension, which brings Addi’s 90-day funding total to $140million and doubles the firm’s valuation.

Addi will use the money to scale its current operations in Brazil and Colombia and expand into Mexico in early 2022. Additionally, the company will look to add new ways for customers and merchants to pay through its platform and its app, which launches later this month.

“This round has increased our focus on making digital commerce ubiquitous and accessible across Latin America. Additionally, it’s a testament to the growth we’ve experienced, as well as the trust we’ve established with merchants and customers alike,” says Addi CEO Santiago Suarez.

But is BNPL all that, or should people be wary?

The Fintech Times heard from financial experts to get their views on BNPL:

Andrea Woroch, Consumer and Money Saving Expert at said “According to a new report, 45% of consumers have taken on more credit card debt since March 2020, with one in five owing more than $20,000 on their cards. Buy now pay later programs tempt consumers to buy things they can’t afford and will create further obstacles in getting themselves out of debt. Even if these monthly installment payments are low, the money going toward those payments is being taken away from credit card payments and indirectly adding to a consumer’s credit card debt burden. BNPL can also increase impulse purchases and make it more difficult to track overall spending.”

Arjun Narayan, CEO and Founder at SalesDuo said, “While it appears that the benefits far outweigh the disadvantages in the BNPL model for merchants, where merchants will need to evaluate the BNPL model very closely is in the ultimate economics of it. While a credit card transaction costs merchants between 1% and 3%, BNPL could cost them 3% to 7% of the transactions. Now, Merchants have to evaluate if there is ample margin to absorb this fee, as this cannot be passed on to the consumer in the form of increased pricing as that will make the merchant less favourable to the consumers in the competitive landscape. The other concerns would be around any backlash to the merchant’s online reputation with chargebacks or any BNPL fraud, and also any poor user experience to the users on the merchant’s website if there are any technical integration challenges with the BNPL service provider. With all of this in the backdrop and given the space is rapidly evolving, it would be prudent for merchants to sign up with BNPL service providers with lower exit barriers.”

Matt Schulz, Chief Credit Analyst for LendingTree said, “Buy Now Pay Later loans aren’t going anywhere. They’re an option at many of the nation’s biggest retailers, and consumers love them. A LendingTree survey found that nearly two-thirds of folks who’ve gotten one of these loans have done so five or more times. That speaks volumes as to how much people like these loans. There’s a lot of risk involved with these loans, however, and none are bigger than the risk of paying late. BNPL loans typically require you to pay every two weeks, which is different than the monthly payment schedule for most loans. That’s a big difference, and if you’re unaware of it, you’re setting yourself up for trouble. Just one late payment can do serious damage to your credit.”


  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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