Concerns Arise as BNPL Industry Faces Decline Amid Lack of Oversight

The buy now, pay later (BNPL) industry, once seen as a booming sector in global ecommerce, is now encountering obstacles as concerns about regulatory oversight loom large. Despite earlier projections of growth, recent data suggests a decline in consumer interest in BNPL services.

NatWest, a prominent bank in the UK, has decided to discontinue its BNPL service, which was launched less than two years ago. The move comes as a surprise after the bank initially noted customer demand for BNPL options in 2022. However, the service failed to gain traction, with customers favoring installment-based credit cards instead.

This decision by NatWest has led to speculation about the future of BNPL offerings from other financial institutions. The situation mirrors challenges faced by BNPL giants like Afterpay in Australia, which experienced a downturn following the collapse of Openpay and ZIP’s withdrawal from international markets due to financial losses.

Meanwhile, BNPL companies in Asia are also encountering difficulties. Malaysian firm IOUpay has faced allegations of fraud, while Vietnam’s Atome ceased operations within a year of its launch. Similarly, Singapore-based Pace opted for dissolution due to mounting debts.

The closures of BNPL services have raised concerns about the sustainability of the model, especially in emerging markets where access to traditional credit is limited. Competition from traditional banks and tech giants, along with regulatory pressures, has added to the challenges faced by BNPL startups.

The industry’s future remains uncertain as stakeholders grapple with the implications of declining demand and regulatory uncertainties.