<p><img src="https://f.hubspotusercontent20.net/hubfs/6583774/paypal_pay-in-4-1.png" alt="paypal_pay-in-4-1" width="679" style="width: 679px;"><span style="font-size: 16px; font-style: italic; background-color: transparent; letter-spacing: 0px;">Source: PayPal</span></p><!--more--><p>Covid-19 has already dramatically reshaped how Americans shop with<a href="https://techcrunch.com/2020/08/24/covid-19-pandemic-accelerated-shift-to-e-commerce-by-5-years-new-report-says/"><span style="color: #954f72; text-decoration: underline;">e-commerce expected to grow 20% in 2020</span></a> as a greater proportion of users shift from in-store to online. Due to this transition to greater online shopping coupled with the increased financial uncertainty of the American public, Button expects that Covid-19 will also reshape how Americans pay for their shopping with a similarly dramatic increase in adoption of “<a href="https://www.fool.com/the-ascent/research/buy-now-pay-later-statistics/" style="color: #954f72;"><span>Buy Now, Pay Later” payment programs (BNPL</span></a>) at checkout.&nbsp;</p><p>The greatest limitation to BNPL adoption is its availability, i.e., whether the retailer offers its customers a BNPL program. Offering such a program in the checkout flow doesn’t happen with the flip of a switch. It requires a direct integration into the retailer’s Point-of-Sale system, which is an onerous process and a meaningful moat for providers in place. Leaders in the BNPL field include Klarna, Affirm, Afterpay, and Quadpay – and PayPal made a major announcement in August that<a href="https://fortune.com/2020/08/31/paypal-buy-now-pay-later-financing-covid-19/"><span style="color: #954f72; text-decoration: underline;">it would begin offering BNPL services</span></a>.</p><p>In anticipation of this season’s increased adoption of BNPL, Button, which is the world’s leading mobile commerce platform having generated over $3.5B in commerce and featuring more than 300 of the world’s leading e-commerce retailers across all spend categories, examined our Marketplace to understand the current state of affairs as it relates to BNPL – how many retailers feature BNPL programs, which programs are most prevalent, and how often do the BNPL programs compete head-to-head.&nbsp;</p><p>Using Button’s Commerce Intelligence, we analyzed the payment method used by consumers in our Marketplace over the past 90 days. We reviewed nearly 500K transactions across more than 300 retailers. Key highlights included:</p><ul><li>Of nearly 500K transactions, Button observed 5 available alternative payment solutions : Afterpay, Affirm, Klarna, QuadPay, and PayPal. While PayPal’s payment option is not exclusively a BNPL option like the others, we included it in this analysis to highlight the significant foundation upon which it can build its BNPL program relative to its competitors.<br><br></li><li>PayPal had the greatest retailer coverage with a presence of 65% retailers. Afterpay was a distant second at 10%, then Affirm 6%, Klarna 5%, and QuadPay 2%.</li></ul><p style="text-align: left;"><img src="https://lh6.googleusercontent.com/pumzxI-Cn8iQhwYFR425yYLmA-Obh4zoGy0Ra0D9kYw0lJ-eINIubEK4xUEfcfloQ3hokH9aZwXTFqsk5Xb3wSL_sxl3v_TcNt5fO8I4bjLDJsV5LqrwS05bc1Dmu7UvKK5w5cE" width="683" style="float: left; width: 683px;"><span style="background-color: transparent; letter-spacing: 0px;">It’s difficult to step out of PayPal’s shadow...the other payment solutions had the following overlap with PayPal of their respective retailer inventory: Klarna (87%), Affirm (80%), AfterPay (77%), and QuadPay (60%).</span></p><p><img src="https://lh3.googleusercontent.com/24isgWgSwHQVXH_XgD6aSwraVdDNZ4yYJ5O-oYtJY_MMH-rtmZAS-5jbunnEfPL3CfJw0gOyVdtwyahTuNqrNu8ArnE07iz0XNP0ojOTGG09L2cKl1N37tv6Gc2yDCAgw_YDZX0" width="681" style="width: 681px;"><span style="background-color: transparent; letter-spacing: 0px;">Of the 218 unique retailers where an alternative payment solution was offered at checkout, multiple alternative payment options were available on 50 retailers (26%). PayPal was the only alternative payment option for 155 retailers (71%). PayPal was only not available on 14 retailers (6%).</span></p><p><img src="https://lh3.googleusercontent.com/GYoW-tOdUljuj-pnY9yc3E3LE9q7dlCh_dM_iNFgPUqdf0oY8WRy9zCjGd2UiG4hMqftF25GON58v0jXGuwtVDck-n2H7jhkmT0CJi4vqppPGzRIvhMNWjNswb0wTFRtiEMu_pQ" width="681" style="width: 681px;"></p><p><span style="background-color: transparent; letter-spacing: 0px;">As a result of greater retailer coverage, PayPal was also the most widely available alternative payment solution. It was an option for 89% of all transactions where an alternative payment solution was available. The other payment solutions trailed with the following transaction coverage: Affirm (15%), AfterPay (8%), Klarna (6%), and QuadPay (&lt;1%). No alternative payment solution was available for 3% of the transactions analyzed.</span></p><p><img src="https://lh6.googleusercontent.com/MjbqDD69qt6gJ4hLipdxklzEZPjfyBvFnXhCNCQlYLRaQzv03CGGZu-pLUP3IswkBy0HXzfjVA5CYk9isxllvu9x0a4H6MckD_g8-w55Sm_jWt5lEsIdHULi0pYNGd7YFC3h3lI" width="680" style="width: 680px;"><span style="background-color: transparent; letter-spacing: 0px;">Adoption rates indicate that BNPL is either in its nascent stage of adoption. Of their respective potential transactions (i.e., where an alternative payment solution was available), PayPal was the most widely selected at 13%, AfterPay was second at nearly 7%, Klarna and Affirm were both selected for ~5%, and QuadPay was selected as the payment method for less than 1% of the transactions when available.</span></p><p><img src="https://lh5.googleusercontent.com/b9fKzZp_sNINWywINOVVpOd8MfjPEOBcQ4nOrwwx3Zc_rOj1gI8xwO3pej_H-cq1KNbsM1f-bU9KPOLA8lHjhVo0DjuMeseN8ADZyRkO3LBooFJfiOk2PiLkjD6_pA7f3AL7S7w" width="677" style="width: 677px;"></p><p>While users selecting to pay with PayPal were not necessarily using PayPal’s BNPL feature, PayPal’s widespread market presence is imposing and has it well-positioned to lead the BNPL space going into the 2020 holiday season. The others - AfterPay, Klarna, Affirm, and QuadPay - will undoubtedly also benefit from this expected rise in BNPL adoption. However, their limited product differentiation -- all providers offer payments in 4 installments, interest free -- and comparatively limited market coverage suggests that they all must achieve significant increases in retailer coverage and user adoption if any of them hope to compete at scale with PayPal.</p><p><em>Originally published in <a href="https://techcrunch.com/2020/10/29/in-the-buy-now-pay-later-wars-paypal-is-primed-for-dominance/" rel="noopener">TechCrunch</a>.</em></p><blockquote><p>Want to know how Button can be your strategic partner? <a href="http://usebutton.com/contact" rel="noopener">Reach out to us today</a>.</p></blockquote>