Insights on the 'Buy now, pay later' market in Latin America to 2028

The BNPL payment industry in Latin America has recorded strong growth over the last four quarters, supported by increased e-commerce penetration

The "Latin America Buy Now Pay Later Business and Investment Opportunities - 75+ KPIs on Buy Now Pay Later Trends by End-Use Sectors, Operational KPIs, Market Share, Retail Product Dynamics, and Consumer Demographics - Q3 2022 Update" report has been added to ResearchAndMarkets.com's offering.

The BNPL payment industry in Latin America has recorded strong growth over the last four quarters, supported by increased e-commerce penetration along with the impact of economic slowdown due to disruption caused by Covid-19 outbreak.

According to the publisher, BNPL payments in the region are expected to grow by 61.3% on an annual basis to reach US$15,395.1 million in 2022.

Medium to long term growth story of BNPL industry in Latin America remains strong. BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 29.6% during 2022-2028. The BNPL Gross Merchandise Value in the region will increase from US$9,547.1 million in 2021 to reach US$72,891.8 million by 2028.

Across the Latin American region, where half of the population falls under the underbanked category, buy now pay later (BNPL) has given way for lenders to reach the mass market. This is evident from the growing adoption of BNPL services among consumers over the last two years. While initially driven by the pandemic outbreak, the BNPL sector's growth has continued even as the impact of the pandemic started to diminish.

Over the last two years, several innovative Fintech firms have entered the BNPL space, including Kueski and Nelo, driving consumer adoption and market growth in Mexico. Notably, the market is so huge in the Latin American market that players can collaborate to drive growth rather than compete against each other. The publisher expects collaboration between players will drive sustainable growth in the Mexican BNPL industry.

BNPL firms are launching an open-loop payment system giving more buying freedom to consumers in Mexico

Globally, BNPL providers partners with online and offline retailers to provide consumers with an option to choose deferred payment services when buying from partner retailers. However, this creates a closed-loop system, thereby restricting consumer choices. However, to give Mexican consumers more buying freedom and an option to select the retailer they want to shop from while using the BNPL payment method, firms are launching an open-loop payment system. For instance,

• In April 2022, Nelo, one of the leading BNPL services in Mexico, announced the launch of its all-in-one app, which allows consumers to shop from any online store in the country. For launching the payment option, the firm partnered with Mastercard. Consumers can use the BNPL payment method at any online store wherever Mastercard is accepted in Mexico.

While the deferred payment method has a share of retail sales in many countries, BNPL is still a novel concept in the largest Latin American market. However, the evident advantages to customers and store owners alike, such as higher purchasing power and increased conversion rates, showcase the significant potential of BNPL in Brazil. Consequently, the publisher expects Brazil's market to record strong growth over the next three to four years.

Firms are adopting a B2B model with a focus on business users in Brazil

Along with an increasing focus on consumers, firms are also adopting a B2B model focusing on business users in Brazil. Both domestic and global players have recently expanded in the B2B BNPL space in the country. For instance,

• Letsbank, one of the players in the B2B BNPL segment, has launched a point-of-sale credit solution for micro and small retailers in Brazil. Notably, the digital bank forged a strategic alliance with Omie, an ERP software provider for micro and small businesses, to add the deferred payment method to its system. The firm aims to expand its credit offering with differentiated strategies. As of June 2022, the firm is offering BNPL products to beverage distributors, which sell to businesses such as restaurants, bars, and bakeries.
• In June 2022, Sezzle, the United States-based BNPL startup, announced the launch of its B2B BNPL services in Brazil. The company invests BRL 7 million in the first year, BRL 15 million in the second, and BRL 25 million in the third to launch operations throughout the nation.The firm entered into a strategic collaboration with Nuvemshop, the e-commerce platform. More than 90,000 online stores associated with Nuvemshop can offer the BNPL payment method to their customers.

The global pandemic outbreak has accelerated digitalization among retailers, and many retailers are turning to online channels. These players, including Letsbank and Sezzle, act as sales accelerators for the country's small and medium-sized businesses.

The full report can be found here.