Cyber Monday Sees Record Surge in ‘Buy Now, Pay Later’ Transactions

It’s been a great year for buy now, pay later (BNPL) companies, with Cyber Monday heralding an early arrival of Christmas for investors. 

2024 witnessed a record-breaking $993 million in sales processed through these services, the vast majority of transactions taking place via mobile devices.

Consumer preferences for flexible payment options are certainly nothing new, but this year’s Cyber Monday sales highlight a huge opportunity for fintech vendors looking to partner with an ever-wider range of retailers.

The rise of buy now, pay later

The holiday season has always been a time when consumer spending skyrockets. However, until BNPL entered mainstream retail, many struggled with limited budgets, despite the Black Friday and Cyber Monday deals.

Fortunately for retailers – and their partners in financial services and fintech – the convenience and flexibility offered by BNPL services have attracted a broader consumer base, even more so during peak shopping periods.

It’s also been an incredibly good year for major fintech companies that provide BNPL services, such as Affirm, Afterpay, and Klarna. Thanks to dramatically increased consumer adoption, they have all experienced significant growth and led to a surge in investor confidence.

Also noteworthy was the fact that almost 80% of this year’s Cyber Monday BNPL purchases were made via mobile devices, highlighting the rapidly growing preference for consumers to shop on the move or use their smartphones to pay when shopping in person.

With opportunity comes risk

While BNPL offers flexibility for consumers and new growth opportunities for both investors and retailers, its meteoric rise in recent years also comes with considerable risk, both in terms of macroeconomic and business risk.

Regulators tend to keep a close eye on BNPL providers to ensure that lending stays affordable and prevents consumers from accumulating unmanageable debt. For example, this year the UK applied the same controls on BNPL companies as those applied to other consumer credit services.

BNPL purchases also introduce unique fraud risks, especially in jurisdictions where regulatory oversight is lax. However, regardless of the compliance situation, BNPL providers must take every reasonable step to mitigate these risks themselves, such as by incorporating strict know your customer (KYC) and anti-money laundering (ALM) checks in their service offerings.

Fintechs especially need to ensure that such functions are deeply integrated in their products. In doing so, they can reduce risk both to themselves and their retail partners and continue to maintain the high level of investor confidence they’ve enjoyed throughout 2024.