COVID-19 is Giving The ‘Buy-Now, Pay-Later’ Model Its Moment

By: Emma Arnese

The ‘Buy-Now, Pay-Later’ Model

It is quite easy to get lost in an online shopping spree, filling up a cart of clothing items with only a few simple clicks. However, upon checking out, most people tend to frantically empty their carts when they see their total amount staring back at them. This state of panic after indulging in excessive shopping behaviors has become even more prevalent in a state of recession. With stay-at-home orders put into place, the retail industry has been struggling to keep afloat. Coresight Research’s latest projections say that in the U.S. alone, 20,000 to 25,000 stores will close this year (Siegel, 2020). The retail industry has not been this heavily impacted since the 2008-09 financial crisis, and this recession is set to take twice as long to overcome (Goetzen, 2020).

Due to the economic consequences of COVID-19, consumers are less likely to spend their money on apparel and accessories, with many people expecting a continual decline in household income in the coming months. As a result, many companies are struggling to make sales and the ‘buy-now, pay-later’ (BNPL) model has been increasingly popular. Although BNPL has been around for a couple of decades, “Worldpay’s new ‘Global Payments Report: The pathways of people and payments’ reveals that Buy Now, Pay Later schemes like Klarna, Afterpay and Affirm are growing at a rate of 39 percent annually in the U.K. and will double their market share by 2023” (Mavadiya, 2020). This option has been adopted by many companies like Revolve, Levi’s, and Urban Outfitters. The BNPL platform allows the consumer to receive their item of clothing before completing a full payment, alleviating buyer’s stress, and ensuring revenue for the retailer without relying on discounting. Over the course of six weeks, the consumer is expected to pay for their item in broken-up installments. This agreement between buyer and retailer expands purchasing opportunities in these dire times where people may be living from paycheck-to-paycheck.

History of BNPL

Before COVID-19, BNPL programs were already on the rise. Many millennials are not interested in racking up interest with credit fees and opt to pay with cash (Backman, 2020). As Adam Ezra, co-founder and co-CEO of BNPL service QuadPay, explains, “67% of millennials don’t have a credit card at all — either because they aren’t approved for one based on their credit history, or they simply prefer to avoid traditional credit. Many don’t think it makes sense to use credit for lower value, everyday purchases that could impact their credit scores and come with hidden costs. As a result, buy now, pay later has emerged as an attractive option not just for millennials,” continues Ezra, “but for all consumers seeking a better way to pay.”

The BNPL model is growing in popularity as people begin to familiarize themselves with its terms. Millennials will be able to shop for all of their must-have items, eventually paying them off in interest-free installments. Oliver Wyman estimates “that leading providers accounted for roughly $20 billion in transaction volume in 2019, with some providers more than doubling volumes year-over-year” (Jones, 2020). It is clear that BNPL can be very successful. In a recession, merchants are more open to incorporating this strategy in their business model to create ease for their customers.

Benefits to Consumers

On the side of consumers, these programs create an opportunity to directly pay the full balance over a definite period of time. If the purchase was made using a credit card, a large purchase could, in contrast, take years to pay off. On the contrary, most BNPL platforms grant the customer the choice of repayment terms—options varying from 3 months to up to more than a year. Offering a BNPL option can help ease the shopper’s worries when they do not have to face an immediate drop in their bank account. Coming to terms with this will instill confidence in the buyer and help avoid the guilt that accompanies a loaded cart. In the long run, companies will be able to prosper from this program even when their typical customers are in lockdown or losing their steady stream of income due to their pandemic-related unemployment.

Opinions from CEO’s

While some may suspect the BNPL model to be another trickling trend brought about by COVID-19, others would argue it to be revolutionary for the retail industry. CEO of BlackCool, a lifestyle brand selling apparel and accessories, Rocky D. WIlliform, notes how “BlackCool’s sales have skyrocketed 600 percent since it launched its BNPL plans several months ago.” He claims that they “have been able to bring in different demographics, including price-conscious consumers who may think our premium products are priced beyond their reach,” (Pymnts, 2020).

There are a handful of these BNPL services companies may utilize. These include ‘Bill Me Later,’ ‘Afterpay,’ ‘Affirm,’ ‘Klarna,’ ‘FuturePay,’ ‘Quadpay,’ ‘Sezzle,’ and ‘Splitit.’ According to Ezra, ‘In the past three years, QuadPay has grown significantly, serving over 2 million consumers and thousands of retail partners on its platform.’ Geoff Kott, Chief Capital Officer at Affirm, tells a similar story. ‘Since Affirm was founded in 2012, we have seen a keen interest in our product evolve over time as consumers continued to be weary of added credit card debt while looking for flexibility to purchase and pay overtime. Affirm currently partners with over 6,000 merchants and has serviced more than 5.6 million consumers,’ says Kott” (Backman, 2020).

It is clear that BNPL is not just a pandemic-driven trend but is here to stay. In our modern age, e-commerce is booming as technology continues advancing. Although COVID-19 has clearly given BNPL it’s moment, this model will outlast the pandemic and allow many spiraling companies to bounce back at full value.


Backman, M. (2020, July 20). Study: Buy Now, Pay Later Services Growing Quickly Among U.S. Consumers. Retrieved August 17, 2020, from

Goetzen, N. (2020, July 06). COVID-19’s impact on the worldwide retail market will be worse than the 2009 financial crisis. Retrieved August 17, 2020, from

Jones, R. (2020, July 14). Buy Now, Pay Later Programs Help Consumers and Merchants Alike. Retrieved August 17, 2020, from

Mavadiya, M. (2020, February 26). Buy Now, Pay Later Schemes To Double Their Market Share By 2023. Retrieved August 17, 2020, from

Pymnts. (2020, July 23). How BNPL Helps Bring Consumers Into Stores. Retrieved August 17, 2020, from

Siegel, R. (2020, June 09). Hard-hit retailers projected to shutter as many as 25,000 stores this year, mostly in malls. Retrieved August 17, 2020, from

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