Hey folks! Today, I want to chat about a super trendy financial service that's been making waves globally—BNPL, or Buy Now, Pay Later.
You might have heard the buzz around it, especially if you're a shopaholic like me. BNPL is this nifty option that lets you buy stuff now and pay for it later, without the hassle of going through credit checks.
Sounds like a dream, right? But here's the kicker: while it’s all the rage abroad, Korea’s MZ generation is just not that into it. Let’s dive into why that is!
What’s the Deal with BNPL?
First things first, BNPL stands for Buy Now, Pay Later. It’s pretty much what it sounds like.
You get to buy something today and pay for it down the road. It’s kinda like a digital layaway plan, minus the old-school vibes. What makes BNPL cool is that it skips the tricky credit checks that come with getting a credit card.
If you're 18 or older, you can start using BNPL right away, even if you don’t have a steady income or a bank account. No annual fees or installment fees to worry about, though you might face some late fees if you miss a payment.
There are some big names in the BNPL game like Affirm, PayPal, Afterpay, and Klarna. And guess what? Even tech giants like Apple and Amazon have jumped on the bandwagon.
Apple rolled out Apple Pay Later, and Amazon teamed up with Affirm to offer BNPL services. Even traditional financial bigwigs like Mastercard and Goldman Sachs are getting in on the action. It’s a BNPL bonanza out there!
Why MZ Generations Abroad are Loving BNPL
So, why is BNPL such a hit with millennials and Gen Zers around the world?
Well, it's partly because it fits right into their digital-savvy, convenience-loving lifestyle. During the pandemic, online shopping soared, and BNPL became the go-to payment method.
According to Payments, a whopping number of U.S. millennials and Gen Zers now prefer BNPL over credit cards.
Why? Because getting a credit card in the U.S. can be a real headache with all the credit scores, income proofs, and deposits required. For students and young professionals with little credit history, BNPL is a breeze and often comes with interest-free installment plans.
The numbers don’t lie either. A report by Global Data showed that the BNPL transaction volume worldwide shot up from $33 billion in 2019 to a staggering $120 billion last year.
Bank of America even predicts that the BNPL market could reach up to $1 trillion in the next few years. That's some serious growth, driven mainly by MZ generations who love the convenience and flexibility BNPL offers.
eMarketer found that 75% of BNPL users in the U.S. are from the MZ generation. Impressive, huh?
The Lukewarm Response of Korea’s MZ Generation
But hold on, what about Korea? Despite efforts from local giants like Naver Pay, Kakao Pay, and Toss, BNPL hasn’t quite caught fire here like it has elsewhere.
Why? Well, the big reason seems to be that getting a credit card in Korea is a walk in the park compared to other countries. Credit cards are easy to get, and they come with loads of perks.
In fact, 75% of private consumption expenditure in Korea is made via credit cards, compared to just 25% in the U.S. (other 20% is Debit Card though haha)
Korean credit cards offer all sorts of goodies like discounts and cashback on everyday purchases—perfect for the lifestyle of MZers who frequent public transport, convenience stores, and cafes.
Plus, they come with sweet no-interest installment plans. On the flip side, Korea’s BNPL services don't offer installment payments yet. You have to pay the full amount later, which kind of defeats the purpose for those looking for flexible payment options.
There’s also a legal cap on how much you can spend with BNPL in Korea. The maximum is 300,000 won (about $250), which doesn’t really cater to the big spending desires of many young consumers. The appeal of BNPL abroad is partly due to the ability to split large purchases into smaller, manageable payments, but that’s just not happening here yet.
Key Takeaways
- BNPL is a hit globally, especially among the MZ generation.
- Big tech companies like Apple and Amazon are diving into BNPL.
- Despite the global trend, Korea’s MZ generation is lukewarm towards BNPL.
- Easier credit card issuance and attractive benefits in Korea are big reasons why.
- The lack of installment options and low spending caps in Korea are also major hurdles.
So there you have it! BNPL might be the next big thing worldwide, but in Korea, it still has a way to go to win over the young crowd.
Until then, it looks like credit cards will continue to reign supreme here. What do you think? Would you try BNPL or stick to your trusty credit card? Let me know in the comments below!
End.
FinanceTalkKorea - financetalkkorea.blogspot.com
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