The domestic fintech space is poised for a major shift – driven by the explosive growth of Buy Now, Pay Later (BNPL) solutions, according to legal experts at fintech-focused Sustineri Attorneys PRUC.
Its latest report the Ghana Fintech Report Q4 2023 projects BNPL to become the dominant trend, echoing the global surge in this flexible payment model.
With concerns over stagnating fintech innovation, coupled with a surge in a consumer-driven demand for e-commerce solutions, improved identification and credit scoring, Sustineri believes BNPL will be a key driver of growth. Global BNPL transactions are expected to skyrocket from US$353billion in 2019 to US$680billion by 2025 – a 92 percent jump.
“The emergence of Buy Now Pay Later payment models represents a paradigm-shift in consumer finance, providing individuals with more options to manage their money effectively,” a portion of the report reads.
Up and away
According to Juniper Research, Buy Now, Pay Later (BNPL) payments are projected to constitute nearly 25 percent of all worldwide e-commerce transactions by 2026; a substantial increase from the 9 percent recorded in 2021.
The affinity for BNPL is notably strong among younger demographics, with Insider Intelligence predicting that 59 percent of Gen Z (born mid-1990s to early 2010s) and 53 percent of millennials (early 1980s to the mid-1990s) will engage in BNPL payments during 2026 – in contrast to 41 percent of Gen X (early 1960s to the early 1980s) and 24 percent of baby boomers (the mid-1940s to mid-1960s).
This payment method holds broad appeal, drawing interest from diverse audiences – with Gen Z and millennials being particularly inclined toward its usage.
Despite the widespread appeal, concerns remain in Ghana – particularly regarding regulatory oversight, data protection and robust credit scoring systems. The report highlights a need for adequate safeguards to ensure responsible BNPL adoption.
On these concerns, the report added: “This flexibility [offered by BNPL] has critics concerned about the potential for BNPL to encourage impulsive spending habits and accumulate debt. Regulatory bodies are closely examining issues related to consumer protection, data security and the fairness of lending practices”.
Open doors
However, the BNPL boom could unlock new funding avenues for Ghanaian startups, as analysts hope increased fintech activity will attract more investment.
Last year, heightened funding caution led to a total funding accumulation of US$2.6billion by African startups in 2023, encompassing equity, debt and grants exceeding US$100,000 as reported by The Big Deal Africa as of November 2023. Of this, US$1.5billion was raised through equity. However, overall funding on the continent experienced a notable -39 percent year-on-year decline.
Ghana found itself trailing the traditional ‘Big Four’ – Nigeria, South Africa, Egypt and Kenya – as these countries collectively attracted 87 percent of all startup funding in Africa, marking their largest share since 2019. Remarkably, these nations housed 71 percent (357 of 500) of startups that secured US$100,000 or more in funding on the continent last year.
