white papers

FinTech and the rise of buy now, pay later

FinTech and the rise of BNPL
Christian Vondenbusch - Portfolio Manager

Christian Vondenbusch

Portfolio Manager
Jeroen van Oerle - Portfolio Manager

Jeroen van Oerle

Portfolio Manager

Need to know


  • Pioneering vendors of buy now, pay later services are being challenged by start-ups swarming over low barriers to entry into the market.
  • All providers will need to prove the resilience of their business models as the recovery matures and regulators seek to embed greater consumer protections.
  • Could stronger competition, decelerating growth and stricter regulation compel pure-play providers to rethink their business models?

What’s next for BNPL?

The pandemic has accelerated many digital trends, including the use of buy now, pay later (BNPL) at the checkout.

BNPL pioneers are being challenged by an avalanche of new start-ups. The entry barriers to BNPL services are extremely low, so it is easy to launch new integrated products, or find cooperative agreements with network providers or merchant acquirers in order to push solutions.

As competition heats up and the economic cycle kicks in, BNPLs will need to prove that credit losses can be covered, and that the business model can remain externally funded by equity, debt, deposits or wholesale funding. The credit model has not been tested yet in a real economic downturn.

Regulators across the world have taken notice of the fast growth of BNPL platforms and are starting to focus on debt affordability, customer protection, transparency of pricing and the use of personal data. BNPL oversight will have to follow to protect customers from overspending and potential debt risks.

With stricter regulation coming, and on a more level playing field with traditional credit providers, growth could slow down, competition with regulated financial institutions could increase and pure play BNPL companies might have to rethink their business models and monetisation strategy.

We expect the growing popularity of BNPL to continue, but it could be tested by stricter regulation, more competition and higher credit losses in an economic downturn.

To read our white paper, ‘FinTech and the rise of BNPL’, please use the download button provided.

important information.

Important information on case studies
The case studies provided in this document are for illustrative purposes only and do not purport to be recommendation of an investment in, or a comprehensive statement of all of the factors or considerations which may be relevant to an investment in, the referenced securities. The case studies have been selected to illustrate the investment process undertaken by the Manager in respect of a certain type of investment, but may not be representative of the Fund's past or future portfolio of investments as a whole and it should be understood that the case studies of themselves will not be sufficient to give a clear and balanced view of the investment process undertaken by the Manager or of the composition of the investment portfolio of the Fund now or in the future.

This document is issued by Lombard Odier Asset Management (Europe) Limited, authorised and regulated by the Financial Conduct Authority (the “FCA”), and entered on the FCA register with registration number 515393.

Lombard Odier Investment Managers (“LOIM”) is a trade name.

This document is provided for information purposes only and does not constitute an offer or a recommendation to purchase or sell any security or service. It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful. This material does not contain personalized recommendations or advice and is not intended to substitute any professional advice on investment in financial products. Before entering into any transaction, an investor should consider carefully the suitability of a transaction to his/her particular circumstances and, where necessary, obtain independent professional advice in respect of risks, as well as any legal, regulatory, credit, tax, and accounting consequences. This document is the property of LOIM and is addressed to its recipient exclusively for their personal use. It may not be reproduced (in whole or in part), transmitted, modified, or used for any other purpose without the prior written permission of LOIM. This material contains the opinions of LOIM, as at the date of issue.

Neither this document nor any copy thereof may be sent, taken into, or distributed in the United States of America, any of its territories or possessions or areas subject to its jurisdiction, or to or for the benefit of a United States Person. For this purpose, the term "United States Person" shall mean any citizen, national or resident of the United States of America, partnership organized or existing in any state, territory or possession of the United States of America, a corporation organized under the laws of the United States or of any state, territory or possession thereof, or any estate or trust that is subject to United States Federal income tax regardless of the source of its income.

Source of the figures: Unless otherwise stated, figures are prepared by LOIM.

Although certain information has been obtained from public sources believed to be reliable, without independent verification, we cannot guarantee its accuracy or the completeness of all information available from public sources.

Views and opinions expressed are for informational purposes only and do not constitute a recommendation by LOIM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change. They should not be construed as investment advice.

No part of this material may be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorised agent of the recipient, without Lombard Odier Asset Management (Europe) Limited prior consent. In the United Kingdom, this material is a marketing material and has been approved by Lombard Odier Asset Management (Europe) Limited  which is authorized and regulated by the FCA. ©2021 Lombard Odier IM. All rights reserved.