Buy Now, Pay Later (BNPL) firms across the globe have been increasing their partnerships with merchants to give customers the choice of spreading their online shopping costs.

Online sales through BNPL firms are likely just the beginning, with more payment instalment players in the sector continuing to make their mark courtesy of digital wallets for in-store purchases.

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Most recently, UK-based BNPL player Zilch is rolling out a ‘tap and pay-over-time’ feature that lets shoppers make in-store payments with a wave of their digital wallet, with the cost spread over a six-week period.

In April 2021, Australian BNPL player Afterpay announced its virtual card. To make an in-store purchase, customers select the card icon in the Afterpay app, thereby activating the card, which can be used to pay with Apple Pay or Google Pay.

Additionally, Klarna has also announced new in-store partnerships and is now giving users the option to download its app and create a digital one-time card to add to their Apple or Google wallet.

The lifting of England’s lockdown is now in the second phase, with retail stores now open to consumers for the first time since the third national lockdown began.

GlobalData’s UK Sentiment Tracker shows that the percentage of 18–24- and 25–34-year-olds expecting to save more has dropped back to pre-pandemic levels as the economy gradually reopens. Their appetite for making big-ticket purchases was slightly above pre-pandemic levels in March 2021.

The user experience with in-store BNPL cards, combined with the majority of younger consumers being inclined to save more than older-age groups, could see them wanting to preserve some of the savings accumulated during lockdown and avoid paying in full, increasing their custom with BNPL providers.

Due to store closures, the younger generation have found themselves allured to the concept of easy-access, interest-free spending options provided by the likes of Klarna and Afterpay when shopping online, ultimately causing concern for the future of credit cards.

In our view, there seemed a point when credit cards had a chance to catch up and win customers over again, but the reopening of stores and introduction of new digital cards from BNPL firms to use in store suggests that time is running out for credit cards to become truly innovative once more.

With BNPL later coming in store and retailers offering their credit cards with highly personalised rewards schemes managed through an app, bank-branded credit cards are facing a two-pronged attack on their future and existing customers.