A growth playbook: BNPL as a payment lever in emerging markets

In today's dynamic global eCommerce landscape, particularly within fast-growing emerging markets, understanding and adopting local payment preferences is crucial for success. While traditional card payments remain relevant, alternative payment methods (APMs) are increasingly popular, and among them, Buy Now, Pay Later (BNPL) is accelerating globally.

Alternative payment methods (APMs): More than just an option

Alternative payment methods encompass a wide range of options beyond traditional credit and debit cards, including eWallets, bank transfers, cash payments, and increasingly, Buy Now, Pay Later. BNPL allows customers to purchase goods or services and pay for them in installments over a set period. Repayments don’t only rely on cards anymore, offering consumers more flexibility and control.

BNPL adoption is gaining momentum, particularly in emerging markets where traditional credit penetration is low and digital payment adoption is high. As consumers increasingly seek flexible financing options at checkout, BNPL has become a natural extension for payment providers aiming to capture more value across the transaction lifecycle.

The structural drivers behind BNPL’s growth

Several factors contribute to BNPL's rise in these regions:

• Highly underbanked population: Many consumers lack access to traditional banking or credit cards. BNPL offers access to short- and medium-term financing without lengthy application processes or high credit thresholds.
• Unmet credit demand: Consumers increasingly seek access to credit to meet their consumption needs. BNPL offers an alternative path to affordability, especially for those underserved by banks.
• Preference for alternative methods: Cash and other local methods remain prevalent, and BNPL can integrate payback options like bank transfers or cash.
• Accessibility and purchase enablement: Deferred payments and installment options make larger purchases more accessible and manageable for buyers. Flexible terms better match customer cash flow needs.
• Young and digitally-savvy demographics: Gen Z and younger millennials—already key adopters in developed markets—are a growing segment in emerging economies, driving BNPL adoption through mobile-first behaviors and openness to new financial tools.

Real outcomes from smarter payment choices

Offering BNPL provides significant advantages for merchants looking to grow in emerging markets:

• Boost conversion rates: Reductions in Non-Sufficient Funds (NSF) and cart abandonment can lead to an increase in conversion rates by up to 40%.
• Access new customer segments: BNPL unlocks demand from users who lack traditional credit or prefer installment-based budgeting, helping you tap into new markets. This allows you to reach a larger audience in countries with low credit card penetration rates.
• Increase Average Order Value (AOV): By making larger purchases more accessible through installments, customers may be encouraged to spend more.
• Improve liquidity: Offering BNPL through a payment solutions provider means you typically receive the full payment immediately, ensuring guaranteed and timely cash inflows without taking on credit risk.
• Enhance customer loyalty and trust: Empowering customers with flexible payment choices can grow brand trust and foster loyalty.
• Strategic positioning: Offering all available payment options strengthens your positioning as a leader in supporting local preferences.

Making APMs and BNPL work in emerging markets

Adding APMs and BNPL in emerging markets often involves navigating fragmented provider ecosystems, redirect-based flows, and strict risk checks that can lower approval rates and impact conversion.

Addressing these challenges requires a nuanced approach grounded in local knowledge. Here are a few strategies that can make a difference:

• Improve user experience and approval rates: Features like embedded checkouts, wallet linking, and streamlined input flows help reduce friction. Additionally, techniques such as soft credit checks, pre-approvals, and data enrichment can lead to higher approval rates.
• Expand repayment accessibility: Supporting diverse payment channels like bank transfers, cash, and real-time systems (like PIX) broadens reach beyond cards and matches local preferences.
• Simplify operations and reduce exposure: A single integration simplifies operations, and credit exposure typically remains with financial providers, reducing the direct risk merchants take on.
• Achieve stronger alignment with market dynamics: When BNPL providers gain aggregated access to a broader consumer base, it can lower their acquisition costs. This can lead to more favorable terms and improved alignment with market needs.

Learn how dLocal’s middleware makes tackling these challenges and integrating locally simpler.

Ready to boost your business with BNPL?

BNPL and APMs are becoming essential tools for businesses growing across emerging markets. Implementing them effectively—while managing complexity, experience, and risk—requires a strong understanding of local conditions.

As BNPL and APM adoption continues to grow, now is a good time to evaluate how these options align with your goals across key markets.