May 11th, 2022

How the global pandemic changed the face of the payments industry

by Brian Shniderman

It is impossible to overstate the impact COVID-19 has had on our daily lives and many of the changes left in its wake may prove enduring. Nowhere is this more apparent than in the way we shop. The initial wave of lockdowns in 2020 pushed shoppers online. E-commerce rose dramatically as a result, with its total retail sales’ share jumping from 16 percent to 19 percent in 2020, according to estimates in a UNCTAD report.

One of the knock-on effects has been the explosion of Buy Now, Pay Later (BNPL) options. While BNPL is relatively well established in overseas markets like Australia, its rise in America is a recent phenomenon.

The Rise of Point-of-Sale Lending Products

There are several options for BNPL; however, the mass market space is very crowded, with various entities dominating the space, offering a Pay-in-4 BNPL model. These products are simply loans that the consumer pays out in installments over four consecutive payments, due every two weeks, hence the name, Pay-in-4. This type of BNPL loan is popular in the retail setting with relatively low-dollar transactions. But for some service providers, such as automotive repair and healthcare professionals, the Pay-in-4 model is generally not helpful because of the short payoff period and lower loan limits.

Luckily, companies like Opy are driving monumental change within the industry to bridge this gap in the market.

Opy offers consumer financing products with transparent, fixed, and fair fees, serving as an alternative payment means to credit, debit, or cash for purchases at participating merchants. Further, Opy’s products include terms up to 24 months and loan limits of up to $20,000. To a consumer, this can be an attractive option compared to maxing out a credit card or using a payment method with high-interest rates.

Installment Loans Makes Budgeting Easier

Paying for closed-end installment loans pair well with managing monthly cash flow and budgeting to avoid the crippling effect of high-interest rates and penalties found with some credit cards and other forms of financing.

Increasingly, finance-savvy Millennials and Gen Z’ers appreciate the time value of money and would extend their time to pay to better deploy their financial resources in the short term. Evidence of this is, since 2019, the percentage of Millennials in the U.S. using BNPL has more than doubled, and the percentage of Gen Z’ers has grown six-fold. To put this in perspective, in the U.S it was estimated 52 million consumers used a BNPL option to make a purchase in December, 2021[1].

And retailers—big and small—are adjusting to giving customers what they want in the new post-pandemic normal in commerce. What is the new normal? With studies showing 68 percent of consumers indicating that BNPL would be helpful when making larger purchases[2], BNPL 2.0 could be the sweet spot in between credit cards and expensive consumer finance.


1. https://www.pymnts.com/study/2022-global-digital-shopping-index-ecommerce-retail

[2] The Truth About BNPL And Store Cards, A PYMNTS and PayPal collaboration, https://www.pymnts.com/bnpl/2022/new-data-shows-bnpl-doesnt-cannibalize-private-label-credit-cards-at-checkout/