The Promise of BNPL in Emerging Markets

The adoption of buy now, pay later (BNPL) services has skyrocketed in recent years, especially among younger demographics. While BNPL originated in developed markets like the United States, there is a massive opportunity for this form of point-of-sale financing to expand into emerging markets as well. However, there are also unique challenges that must be addressed in order for BNPL to be successful in these markets.

Several characteristics make emerging markets ripe for BNPL growth:

Lack of credit access – Billions of consumers in emerging markets lack access to traditional credit like credit cards. BNPL can serve as an on-ramp to credit for these consumers.

Young demographics – Emerging markets like India and Brazil have a high proportion of young consumers who are digital natives. These technologically-savvy populations are ideal BNPL users.

Rising consumer spending – Increasing prosperity in emerging markets translates into more consumer discretionary spending on items like electronics, apparel, and home goods – all major BNPL categories.

Online/mobile shopping boom – E-commerce and mobile shopping are growing rapidly across emerging markets. The ease and speed of BNPL align perfectly with these digital shopping trends.

Financial inclusion – BNPL can play a major role in bringing financial services to the unbanked and underbanked. By improving access to credit, BNPL promotes financial inclusion.

Unique Challenges for BNPL in Emerging Markets

Emerging markets also come with their own unique challenges and risks for BNPL providers:

Regulatory uncertainty – Rules around consumer lending are often less developed or inconsistently applied in emerging markets. BNPL regulation continues to evolve even in mature markets.

Data limitations – Thin credit files and limited consumer financial data pose challenges for BNPL underwriting and decisions. Unconventional data may need to be leveraged.

Fraud risks – Fraud management could be more difficult with fewer identity verification resources available in these markets.

Operational complexity – Distribution networks, payments infrastructure, transportation, and logistics can be less developed in emerging markets. Supporting BNPL requires overcoming these operational hurdles.

Language and cultural barriers – Effective marketing and user communications need to be localized appropriately across various emerging markets.

Keys to Success with BNPL in Emerging Markets

BNPL providers looking to tap into these opportunities in emerging markets would be wise to focus on the following:

  • Form local partnerships with e-commerce platforms, retailers, banks, and payment providers. These partners already have customer relationships and important local infrastructure in place.
  • Invest in alternative data sources and advanced analytics to power more effective underwriting, fraud detection, and risk modeling. AI and machine learning can help fill data gaps.
  • Build extensive local operations and support teams to handle tasks like documentation collection, customer support, and collections. Local boots on the ground are essential.
  • Take the time to understand cultural nuances across different markets to ensure products are structured appropriately to meet local needs and preferences. A one-size-fits-all approach will struggle.
  • Commit to financial inclusion by designing products to responsibly provide access to credit and drive positive outcomes for unbanked consumers. This requires avoiding aggressive collection tactics ill-suited to vulnerable populations.

The Road Ahead for BNPL


BNPL has already achieved impressive global growth in a short period of time. But expanding into emerging markets represents an enormous opportunity still on the horizon. There is a multi-billion dollar greenfield opportunity to provide BNPL services to aspiring consumers in these markets. With smart strategic approaches to overcome the challenges, BNPL is poised for massive growth in emerging markets in the years ahead.

The democratization of credit access stands to accelerate economic development and financial inclusion in these regions. The article has been written by Bahaa Abdul Hussein and has been published by the editorial board of Fintek Diary. For more information, please visit

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