In this piece, we will take a look at the top 15 buy now pay later (BNPL) companies in the U.S. For more companies, head on over to Top 5 Buy Now Pay Later (BNPL) Companies in the U.S.
The modern day financial industry allows consumers to have access to credit if they want to make purchases without wanting to immediately pay. This offers several benefits such as ensuring that a product or service is of the right quality before a payment is made, or to make a payment before a paycheck or other funds arrive. Traditionally, banks have offered their customers credit cards to make purchases at the start of the month and then clear the amount later – typically at the end of the month or the year.
However, getting a credit card often requires a hefty background check and a strong credit history, especially when first time applicants are considered. Banks take a risk in providing loans to their customers, and they conduct thorough analyses to ensure that their debtors will be able to pay back their loans. A new industry that has sprung up to bridge this gap between traditional financial institutions and the everyday consumer is the buy now pay later (BNPL) industry. This industry is made up of companies that offer the ability to make purchases or payments without having the cash upfront. The user can then make monthly payments, with or without an interest rate (depending on the company) and for either products or services such as healthcare or rent.
In terms of industry size, the BNPL segment is one of the fastest growing industries that you are likely to come across. Some of the hottest growing industries these days are biotechnology and 3D printing (or additive manufacturing) and the BNPL is ahead of both of these when its estimated compounded annual growth rate (CAGR) is taken into account. For instance, a research report from Allied Market Research outlines that the industry was worth $90 billion in 2020 and it will grow at a stunning CAGR of 45.7% between then and 2030 to sit at a whopping $3.98 trillion by the end of the forecast period. Bifurcating the market into product types and geographies, the research firm shares that retail purchases made through BNPL platforms make up for the largest portion of the market but payment for services such as healthcare will be the fastest grower. It adds that Asia will be a strong grower in the future, as the rising cost of daily use appliances will entice customers to move towards BNPL.
Another report, this time from Fortune Business Insights, is more muted when estimating the market’s growth rate and size. It pegs the 2021 industry value at $15 billion and believes that by the end of this year, the BNPL market will be worth $22.86 billion. From then until 2029, the industry will grow at a 21.7% CAGR and be worth $90 billion by the end of the forecast period.
Today’s piece will zero in on the BNPL companies that offer their services in America. Some top players are Four, Zip, and Splitit.
Photo by Sharon McCutcheon on Unsplash
Our Methodology
We sifted through the dozens of buy now pay later (BNPL) companies that are offering their services globally to narrow down those that also target Americans. These companies are ranked through their annual percentage rate (APR) which is the interest rate on a loan for the whole year. The list is ranked in descending order of APR, and the highest APR charged is used. Often, consumers are offered lower APRs, but for the sake of comparison, a worst case scenario is assumed. Additionally, APR is not the only fee charged by BNPLs, and other charges such as those for using cards may come as a surprise to consumers. Finally, several companies on our list do not charge an APR; instead, they have late payment fees. This has been clarified where applicable, and a link to the firms’ payment terms has also been added when possible. Additionally, if you want to know which companies are the biggest BNPL players globally, then do check out 11 Biggest BNPL Companies in the World.
Top 15 Buy Now Pay Later (BNPL) Companies in the U.S.
15. Uplift
Highest APR Charged: 36%
Uplift is a use case specific BNPL provider that focuses its efforts primarily on the travel industry. The firm provides customers the ability to pay for their travel plans for cruise companies and resorts as well as for vacation partners. Uplift is based in Sunnyvale, California, and it also has offices in Mexico and Canada. While we were unable to come across a lending profile for the company, it states on its website that the highest APR that a customer can be charged is 36%. This is calculated through credit history and purchase details, alongside other factors. Since the APR is high, Uplift does not state to have any late payment fees.
14. Affirm
Highest APR Charged: 36%
Affirm is one of the most popular BNPL services out there. Headquartered in San Francisco, California, the company offers different types of products. These range from a 0% APR to one that touches 36% for the highest on our list. The 0% option is for those customers that are allowed to make their payment in four installments, while the other payments start from a baseline APR of 10%.
13. Sunbit
Highest APR Charged: 35.99%
Sunbit is a buy now pay later platform that covers everyday purchases. It offers its services to both the consumer and the merchant. The company is based in Los Angeles, California. The firm allows its customers to make payments through a mobile application and through a point of sale lending application. The highest APR charged by Sunbit is 35.99%, but this is only for borrowers from Colorado and Connecticut, who have spent loans less than $1,000 or $5,000. Maximum borrowing from Sunbit at a single point in time is $15,000 and this drops to $1,500 for residents from Hawaii.
12. Afterpay
Highest APR Charged: 35.99%
Afterpay is an Australian firm that offers services to residents in most American states. It offers different packages, out of which the 0% interest option charges an $8 late payment fee if a payment has not been made for ten days. However, this payment is capped at 25% of the order. Afterpay’s APR rates range from 0% to a massive 35.99% for its monthly payment packages that spread the purchase over six or 12 months. However, these are simple interest loans, as the interest is calculated on the principal instead of the capitalized amount.
11. Wisetack
Highest APR Charged: 29.99%
Wisetack is a BNPL company that is headquartered in San Francisco, California. The company provides payment support for different services, such as dental work, home repair, and, automotive work. It requires the use of a phone number to use the service, and charges a simple interest rate as opposed to a compounded rate which involves adding the interest to the principal and then charging a new amount on this. Wisetack’s highest APR is 29.99%, and it is known to approve loans for applicants with a credit score as low as 540. The maximum financing limit is $25,000 and the loan can be stretched out for as long as five years.
10. PayPal Holdings, Inc. (NASDAQ:PYPL)
Highest APR Charged: 29.99%
PayPal Holdings, Inc. (NASDAQ:PYPL), which is one of the world’s largest payment platforms, also offers a BNPL service. This service offers different rates for different purchases. For instance, if your purchase is less than $1,500, then PayPal Holdings, Inc. (NASDAQ:PYPL) will not charge you an APR and instead require you to pay back the money in four installments. However, if you want to pay monthly and have a purchase ranging between $199 and $10,000, then an APR as high as 29.99% can be applied with up to 24 monthly payments allowed.
Insider Monkey surveyed 920 hedge funds for their third quarter of 2022 investments to discover that 126 had bought PayPal Holdings, Inc. (NASDAQ:PYPL)’s shares.
PayPal Holdings, Inc. (NASDAQ:PYPL)’s largest investor in our database is Ken Fisher’s Fisher Asset Management which owns 17.6 million shares that are worth $1.5 billion.
9. Klarna
Highest APR Charged: 28.99%
Klarna is headquartered in Columbus, Ohio, and it offers BNPL for a wide variety of different products. These include home improvement hardware, gadgets, appliances, cars, books, and office equipment. The firm also offers several 0% APR services (with late payment fees instead), including those for four payments or pay later options. However, its highest APR chargeable is 28.99%, and the firm’s monthly financing options in partnership with WebBank through an open end credit account lists the standard APR at 19.99% according to a sample document.
8. PrimaHealth Credit
Highest APR Charged: 24.99%
PrimaHealth Credit focuses its attention primarily on healthcare payments and purchases. The firm is based in New Port, Beach, California and the firm claims to approve up to 89% of payment applications. It charges APR based on the user’s credit history, and also required minimum monthly payments. PrimaHealth Credit has a 0% APR for ‘Good’ credit history, a 16.99% APR for ‘Average’, and a 19.99% to 24.99% for ‘Challenged’ applicants.
7. Sezzle
Highest APR Charged: 0%
Sezzle is a retail product buy now pay later platform that is headquartered in Minneapolis, Minnesota. It supports cosmetics, apparel, health, furniture, and other purchases. The firm does not charge any interest on purchases, and it provides users with payment time periods. However, missing a payment leads to a $15 fee with the missed payment also reported to credit bureaus. Additionally, Sezzle allows only one free rescheduling per order, with more done after a fee.
6. Perpay
Highest APR Charged: 0%
Perpay is based in Philadelphia, Pennsylvania, which is unique in the sense that it allows users to make purchases on its own marketplace. Unlike other BNPL providers with a 0% APR that charge late payment fees for missed payments, Perpay does not charge any such fees. However, the catch is that the user is limited to the Perpay marketplace, and if the product is not there, then they will not be able to buy it.
Click to continue reading and see Top 5 Buy Now Pay Later (BNPL) Companies in the U.S.
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Disclosure: None. Top 15 Buy Now Pay Later (BNPL) Companies in the U.S. is originally published on Insider Monkey.