The global Buy Now Pay Later market shows incredible numbers - from USD 16 billion in 2023 to USD 115 billion by 2032.
A CAGR of 25.3% makes building a BNPL app like FlexShopper an amazing chance right now. Research suggests the market could reach $3.98 trillion by 2030, with a CAGR of 45.7% from 2021.
These figures tell a clear story - BNPL has become a permanent part of shopping. The market keeps growing as 80% of customers use these services at least once every six months. North America dominates the global BNPL market and generated about 32% of worldwide revenue in 2022.
Building an app like FlexShopper that taps into this market needs careful planning, technical know-how, and market insight. CISIN's experience as a leading mobile app development company has helped many fintech startups succeed.
This detailed piece covers everything you should know. You'll learn FlexShopper's business model, key features, and regulatory requirements. We'll show you useful steps to build a competitive BNPL solution that makes its mark in this faster growing market.
Understanding the BNPL Market Opportunity
BNPL is changing how people shop and pay for products worldwide. Let's look at why developers find this payment method so appealing for app development.
BNPL market size and growth projections
The Buy Now, Pay Later sector has grown rapidly since 2019. This once small payment option has become a financial giant. Daily transactions have jumped from less than $7 million in 2019 to nearly $100 million by 2022.
Market projections show the global BNPL market will reach about $560 billion by 2025, with a 13.7% yearly growth. The market could expand to $911.8 billion by 2030, growing at a compound annual growth rate (CAGR) of 10.2%.
Revenue figures tell a different story for BNPL providers. These estimates put the market at $23.37 billion in 2025, with potential growth to $83.36 billion by 2034 at a 15.18% CAGR.
Asia-Pacific leads with the biggest market share at 36.42%. North America, mainly the U.S., makes up about 29-32% of global BNPL revenue. The U.S. market shows the fastest expected growth at 15.11% CAGR during this period.
Why consumers prefer BNPL over credit cards
Recent surveys show that 30% of Americans have tried BNPL services. Generation Z now uses BNPL more than regular credit cards for holiday shopping, 54% chose BNPL while 50% used credit cards.
People choose BNPL for several reasons:
- Cash flow improvement: 57% of users want to split large purchases into smaller payments
- Low or no interest: 40% of consumers like that BNPL usually charges no interest
- Credit accessibility: 26% of people find BNPL easier to get than regular credit
- Financial liquidity concerns: Credit card usage rates go up before people try BNPL for the first time, which suggests they turn to BNPL when their cards are near the limit
BNPL users tend to have higher credit card usage rates (60-66%) compared to non-users (34% average). Many people see BNPL as a good option when their credit cards are almost maxed out.
Young people love BNPL. Borrowers aged 18-24 use it the most, with BNPL making up 28% of their total unsecured debt in months they borrow. The average across all age groups is 17%.
Key players and their business models
The BNPL market has several major providers with unique strategies:
- PayPal: Rules the U.S. market as 68.1% of BNPL shoppers use its "Pay in 4" service. Millions of merchants trust PayPal, which gives it an edge.
- Afterpay: Has 25.9% of the market and targets younger shoppers with simple four-payment plans. Stores using Afterpay see 20-30% larger orders and 40% more repeat purchases.
- Affirm: Controls 21.9% market share and stands out by offering longer payment plans up to several years. They skip late fees and work with high-end merchants, lending over $1 billion yearly just through Peloton.
- Klarna: Takes 21.5% of the market and offers various payment choices while making shopping easier through its app. Businesses report 68% more sales after adding Klarna.
These BNPL companies make money mainly from store fees of 4-6%, higher than credit card fees of 2-3%. Stores accept these fees because BNPL boosts sales by 20-40% and reduces abandoned carts.
Join the Future of Global Payments
With consumer shopping habits shifting permanently toward installment-based services, now is the time to develop a competitive solution. Tap into the massive demand for modern financial tools.
What Makes FlexShopper a Unique BNPL Model
FlexShopper sets itself apart from other BNPL providers through its unique financing approach for consumer purchases. The company's payment solution targets a different consumer segment than standard pay-in-4 models. Building a BNPL app like FlexShopper requires you to understand these distinct features.
Lease-to-own structure explained
FlexShopper's lease-to-own financing model works differently from typical BNPL services. Customers make weekly or bi-weekly payments over 12 months instead of short-term installments. This longer timeframe lets customers own their purchases, unlike traditional BNPL options.
The lease structure works through these key components:
- Full ownership after 52 weekly payments - Customers get full ownership after completing one year of payments
- Early purchase options - An "Early Purchase Option" becomes available after 90 days so customers can own items sooner
- Flexible payoff terms - Customers can save up to 35% on their remaining balance by paying off the lease before the year ends
- No down payment required - Customers can take items home right away without any upfront costs
This lease-to-own model gives customers more payment flexibility than standard BNPL services, especially when you have larger purchases like furniture, appliances, and electronics. The structure appeals to people who need extra time to pay for big-ticket items.
No credit check and broader product range
FlexShopper makes itself available to people with limited or poor credit history. Their "bad credit is OK" policy opens doors for customers who can't access traditional financing. While good credit isn't needed, not everyone with bad credit gets approved.
The platform offers:
Instant spending limits up to $2,500 - Customers can apply and get their spending limit right away. This pre-qualification shows purchasing power before shopping begins.
Product diversity beyond typical BNPL categories - FlexShopper has a complete range of household goods, unlike many BNPL services that focus on fashion or electronics. You'll find furniture, electronics, appliances, video gaming equipment, cell phones, cameras and more.
Multi-channel shopping experience
FlexShopper creates a smooth shopping experience through multiple channels:
Dedicated online marketplace - The platform has the "largest online lease-to-own selection" for direct shopping.
Third-party retailer integration - Customers can use FlexShopper financing while shopping with partner online retailers.
In-store presence - Automated kiosks at select retail locations bring financing options to physical stores.
Mobile-first approach - The platform employs smartphones for modern shopping, matching industry research where 41% of retailers want customers to use personal devices in-store to help with purchases.
FlexShopper has grown beyond its core lease-to-own business through a strategic collaboration with TAB Bank to launch FlexLending, a new installment loan product. This expansion lets them serve more consumers and work with additional retailers.
Building an app like FlexShopper requires careful thought about this multi-channel strategy. Integrating various shopping options creates a smooth experience that meets customers wherever they shop, a vital feature in today's retail world.
Planning Your BNPL App: Business Model and Strategy
Your BNPL app's success starts with crucial business model decisions that shape your target audience and revenue potential. These early choices will determine your app's market position and how well it performs in the long run.
Choosing between lease-to-own and pay-in-4
The BNPL market has two main models that target different consumer segments:
Pay-in-4 model: This standard BNPL approach splits purchases into four equal, interest-free installments over six weeks. Average ticket sizes range from $50 to $1,000. This works great for fashion, beauty, and smaller electronics purchases. About 80% of these customers already have credit cards with enough available credit, but they prefer BNPL because it offers clearer payment terms.
Lease-to-own model: This alternative works best for subprime consumers, 95% have credit scores below 700, and 70% fall below 600. Customers can stretch payments over longer terms (usually 12 months) for bigger purchases like furniture and appliances. While implied APRs run higher, merchants sometimes get rebates from lease-to-own providers.
Revenue streams: merchant fees, late fees, subscriptions
A BNPL business needs multiple ways to make money:
Merchant fees: This main revenue source brings in 70-80% of BNPL income. Most providers charge merchants 2-8% of transaction value. These fees run higher than typical credit card processing fees but merchants see them justified by better sales conversion and larger basket sizes.
Late payment fees: Consumer fees, especially late fees, made up 13.4% of BNPL revenues in 2021, up from 11.7% in 2020. Late fees alone brought in 6.9% of revenues in 2021.
Alternative revenue options:
- Affiliate marketing (merchants pay 4-12% when customers come through your app)
- Premium subscription tiers with added benefits
- Data monetization (ethically and compliantly)
- Interest on longer-term financing options (for purchases beyond the standard pay-in-4 model)
McKinsey's research reveals that merchants value customer acquisition more than increased cart conversion or average order values. So, affiliate marketing services that direct consumers to merchants can command higher fees than financing alone.
Regulatory considerations and compliance
The BNPL industry faces stricter regulatory oversight that affects how you build an app like FlexShopper:
Recent developments: The Consumer Financial Protection Bureau (CFPB) released an interpretive rule in May 2024. This rule requires BNPL providers to match credit card companies in consumer protections. These protections cover transaction dispute rights, return processing, and periodic statements.
Key compliance areas:
- PCI-DSS for payment security
- GDPR/CCPA for data privacy
- Know Your Customer (KYC) procedures
- Fair lending laws like Equal Credit Opportunity Act
- State-level lending regulations that vary by jurisdiction
You need a flexible technical framework to adapt to regional requirements. To cite an instance, some states require all lenders to get licensed, while others only need licensing above certain dollar amounts or interest rates.
Your first big decision involves choosing between operating under your own lending license or partnering with a bank or NBFC. Bank partnerships simplify compliance but cut into profit margins.
Design a Winning BNPL Business Model
Choosing between lease-to-own and installment plans requires a deep understanding of your target audience and local regulations. Let our experts help you map out a strategy that ensures long-term success.
Must-Have Features for a BNPL App Like FlexShopper
Building a competitive BNPL application needs features that tackle user problems head-on. Your app's success depends on how well it works and what users think of it. Let's look at the must-have features you need to build a BNPL app like FlexShopper.
User onboarding and KYC
First impressions can make or break your app. Your onboarding needs to balance security and simplicity. A full picture of KYC (Know Your Customer) checks user identity and helps stop fraud.
Modern BNPL apps pack several verification tools:
- Document scanning with live data extraction
- Facial recognition with liveness detection
- Biometric authentication options
- Database and watchlist validation
Spending limit and pre-qualification tools
BNPL services run a soft credit check on new users that won't hurt their credit score. This check shows how much they can spend and their pre-approved limits.
New income checking platforms now link straight to users' bank accounts through open finance APIs. This gives you key information:
- 24 months of deposit history
- Estimated annual income
- Average monthly income
It's worth noting that 63% of BNPL users took multiple loans at once in the last year. Smart AI systems look at spending patterns, steady income, and buying habits to set limits that protect everyone involved.
In-app product marketplace
Your BNPL app should be more than just a way to pay. An built-in marketplace of partner stores keeps users in your system and makes financing part of shopping.
The marketplace needs sorted product lists, tailored suggestions, good search tools, and smooth checkout. Partner stores and their products should stand out in the shopping screen.
BNPL apps help stores sell 20-30% more and fewer shoppers abandon their carts. A well-laid-out marketplace helps both shoppers and stores through better visibility and sales.
Flexible repayment scheduling
Payment plans shouldn't be one-size-fits-all. The "pay in 4" option is common, but giving users choices puts them in control. Your app should handle:
Weekly, bi-weekly, or monthly payments that line up with paychecks Automatic payments to improve collection Clear payment terms and due dates
This flexibility leads to fewer defaults since customers pick schedules that match their money situation. Studies show 41% of BNPL users missed at least one payment last year. Payment options that work with users' actual cash flow can help fix this issue.
Real-time notifications and reminders
Good communication stops missed payments and keeps customers happy. Your alerts should include:
Automatic reminders before payments are due Alerts for payments that work or fail Push notifications about new deals Updates about spending limits and account status
These core features are the foundations of any successful BNPL application. Making them work takes both tech skills and understanding how people handle their money.
Step-by-Step Guide to Build a BNPL App
Building a BNPL app takes careful planning and execution. Here's a breakdown of six key phases that will take you from concept to a market-ready product.
1. Conduct market and competitor research
A successful BNPL app starts with good research, not code. You should know your target audience's financial habits, shopping priorities, and challenges. The next step is to study competitors like Klarna, Afterpay, and Affirm to see what works and what doesn't.
2. Define your app's core features and flow
After research, you'll want to pick features that make your app unique. The basic features should include:
- User registration and KYC
- Credit assessment mechanism
- Spending limits calculator
- Flexible payment scheduling
- Merchant integration
- Notification system
Map out how users will move through these features. Set development milestones and create a project timeline. A well-laid-out feature roadmap will help guide your development team through the project.
3. Choose the right tech stack
The technologies you pick will affect your app's performance, scalability, and security. For a BNPL app like FlexShopper, you should think about:
Frontend: React Native or Flutter for cross-platform mobile apps; HTML5/CSS3/JavaScript for web interfaces
Backend: Node.js, Python, or Java with frameworks like Express.js or Spring Boot
Database: PostgreSQL/MySQL for structured data; MongoDB for flexible storage
Cloud Services: AWS, Google Cloud, or Azure for hosting and scalability
Security: SSL/TLS encryption for data transmission; AES-256 for data at rest
4. Design UI/UX for ease of use
Users want clear details about total payments, due dates, and interest. Bad UI leads to cart abandonment. Your app needs high-contrast layouts and up-to-the-minute repayment breakdowns for better visualization.
Start with wireframes in Figma or Adobe XD to verify user flows. Focus on:
- Frictionless onboarding
- Clear navigation
- Transparency in credit terms
- Trust-building elements
5. Develop backend and frontend modules
Now it's time to code both frontend and backend components. Start with an MVP that has these core functions:
- Onboarding & KYC
- BNPL payment flow
- Credit scoring engine
- Repayment scheduling
- Notification system
Build in security measures like data encryption, secure authentication, and fraud prevention. The system should also have auto-scaling capabilities and zero-downtime deployments to keep service running smoothly.
6. Integrate payment gateways and APIs
BNPL apps rely on many integrations. You'll need to connect:
- Payment gateways (Stripe, PayPal, Razorpay)
- Credit bureaus (Experian, Equifax)
- KYC/AML providers (Onfido, Jumio)
- Merchant catalog systems
Each integration comes with its own requirements. You should sandbox all APIs to avoid problems. A single error in credit reporting could lead to regulatory penalties. Make sure all external services work naturally together, from merchant catalog syncing to real-time scoring.
Note that thorough testing is crucial before launch. This includes functional testing, security audits, compliance checks, and performance optimization. Keep an agile approach that lets you make improvements based on testing feedback.
Security, Compliance, and Risk Management
Security is the foundation of any successful BNPL application. The surge in fintech fraud and growing regulatory oversight means protecting your users' financial information isn't optional; it's crucial to survive.
PCI-DSS and GDPR compliance
Your BNPL app, like FlexShopper, must follow Payment Card Industry Data Security Standards (PCI-DSS). This framework protects cardholder data through encryption, access control, and regular security testing. You'll need to maintain firewalls, protect stored data, encrypt transmissions, and implement strong authentication measures.
GDPR adds another critical security layer that focuses on:
- Accurate data reporting that shows consumer credit risk
- Limited data use for legitimate business purposes only
- Consumer access rights to review and dispute errors
- Clear policies about data sharing
Ignoring these regulations can cost you dearly. Swedish BNPL provider Klarna learned this the hard way and paid SKr 7.5m (USD 733,324) in fines for GDPR violations because they didn't properly inform users about personal data storage.
Fraud detection using AI/ML
BNPL apps don't deal very well with fraud because of their quick approval processes and limited credit checks. AI-powered fraud detection helps protect against account takeovers, synthetic identities, and first-payment defaults.
Random Forest algorithms work exceptionally well. A study showed they achieved an impressive F1 score of 0.92 with a low false positive rate of 0.072. These systems look for suspicious patterns and flag them immediately.
Your fraud monitoring should watch for:
- Mismatched billing and shipping addresses
- High-value first purchases
- Unusual buying patterns
- Multiple account attempts
Data encryption and secure login
You'll need multiple security layers to protect data throughout its lifecycle. Your BNPL app should have:
- Data-at-rest encryption using strong algorithms like AES-256
- API endpoint protection with string and resource encryption
- Two-factor authentication for account access
Mobile security needs special attention to block overlay and keylogging attacks that might capture user credentials. The app should detect tampering, prevent reverse engineering, and block emulators that could enable fraud.
Facial recognition and biometrics can make authentication stronger and smoother, essential features for BNPL apps where users just need quick and easy access.
Note that BNPL apps hold sensitive personal and financial information. Building proper security measures from the start helps you avoid legal troubles as your user base grows.
Cost Breakdown of Developing a BNPL App
Many entrepreneurs are surprised by the actual costs of BNPL app development. You'll need a good grasp of these expenses to plan your budget as you build an app like FlexShopper.
Factors affecting cost: features, platform, team location
Your final bill for creating a BNPL solution depends on several key elements:
App complexity shapes your development time and resource needs. Simple payment splitting costs less than AI-driven credit scoring or fraud detection systems. Your investment grows as you add custom features and complex integrations.
Platform choice is a vital decision point. Native iOS and Android development needs separate codebases, which raises expenses. Cross-platform frameworks like React Native or Flutter let you reuse code and cut costs.
Team location changes hourly rates by a lot:
- US: $95-100/hour
- Western Europe: $80-90/hour
- Eastern Europe: $50-55/hour
- Asia: $25-40/hour
You can save 60-75% by working with Asian developers instead of US-based teams while getting the same quality.
Cost ranges for basic to advanced apps
BNPL apps come in three complexity levels with different price tags:
Basic BNPL app ($30,000-60,000): Has simple onboarding, basic KYC, checkout integration, loan limit calculation, and standard UI. It takes 3-6 months to build.
Mid-level BNPL app ($60,000-150,000): Offers advanced KYC with document verification, rule-based credit scoring, merchant dashboard, multi-gateway payment integration, and better UI/UX. Development takes 6-9 months.
Advanced BNPL ecosystem ($150,000-250,000+): Delivers AI-driven credit scoring, custom risk engine, automated fraud detection, analytics dashboard, and premium UI/UX. Build time extends beyond 9 months.
Your budget should cover ongoing costs: monthly maintenance ($1,500-2,000), cloud infrastructure ($500-1,800), marketing ($8,000-45,000), and regulatory compliance ($12,000-25,000).
How CISIN helps reduce development costs
CISIN, a mobile app development company, keeps BNPL app development affordable through several approaches:
They use open-source technologies to cut licensing costs while getting community support.
The company applies agile development methods and breaks projects into small iterations. This helps catch issues early and prevents expensive fixes later.
Their offshore teams in cost-effective regions provide top talent at lower rates without compromising quality.
This balanced strategy helps fintech startups make the most of their development budgets while building apps that can grow with market changes.
How to Monetize Your BNPL App Effectively
Revenue streams are the foundations of any BNPL app's long-term success. Building an app like FlexShopper requires a clear understanding of these income channels to create an environmentally responsible business model.
Merchant transaction fees
Merchant fees are the primary source of BNPL revenue. These charges range from 2% to 8% per transaction, averaging 4% to 6%. Credit card processing fees are lower, averaging 2.5% to 3.5%.
Merchants willingly pay these higher rates because BNPL providers position them as marketing tools that drive sales growth. Businesses report 20-30% higher average order values with BNPL options. The math makes sense for most retailers:
- Small businesses need margins of at least 25-30% to comfortably handle BNPL fees
- All but one of these retailers with margins under 15% cut back or eliminate BNPL options
Late payment penalties
BNPL apps charge fees when customers miss payments. These penalties encourage on-time payments while adding to the revenue stream. Consumer fees, including late charges, made up 13.4% of BNPL revenues in 2021, up from 11.7% in 2020.
Building an app like FlexShopper requires clear late fee structures. Many providers freeze accounts after missed payments until customers bring them current.
Premium user subscriptions
Subscription models provide steady recurring revenue. Klarna expanded its membership program with these tiers:
- Core: $4.99/month
- Plus: $9.99/month
- Premium: $19.99/month
- Max: $44.99/month
Each tier includes better perks like airport lounge access, cashback, and premium subscriptions to Headspace and The New York Times.
Sezzle's premium subscription costs $13.99 monthly, while "Sezzle Anywhere" runs $19.99. Their subscriber base reached 568,000 by Q3 2023.
Data monetization and affiliate deals
BNPL providers gather valuable shopping and payment data. This information creates revenue through:
- Closed-loop shopping apps with partner merchants
- Brand promotion to targeted audiences
- Merchant analytics dashboards
Affiliate marketing adds another revenue stream, with merchants paying 4-12% for customers who come through your platform.
CISIN, a mobile app development company, helps merge these revenue models into your BNPL app architecture from the start, which prevents redesigns from getting pricey later.
Build a Profitable and Sustainable Ecosystem
Integrate diverse revenue streams from merchant commissions to premium user tiers into your app's core architecture. Maximize your returns while providing value to both shoppers and retailers.
Conclusion
Building a BNPL app like FlexShopper offers a great chance in today's fast-growing fintech market. The growth numbers tell an exciting story - from $16 billion in 2023 to $115 billion by 2032. These figures show why you should pay attention to this space. This piece walks you through what you need to build a competitive solution in this profitable market.
Market dynamics play a vital role before starting development. Young people now prefer BNPL options over traditional credit cards. This shows a basic change in how consumers want to pay. Your target audience and revenue potential will depend on whether you choose lease-to-own or pay-in-4 models.
Your app's success depends on getting the core features right. A good BNPL solution needs user-friendly onboarding, accurate credit checks, flexible repayment options, and instant notifications. These features combined with smooth shopping help your app stand out.
Security must be a top priority. Your app needs PCI-DSS compliance, data encryption, and AI-powered fraud detection from the start. These measures protect your users and business while meeting all regulations.
App costs vary based on complexity, platform choice, and where your development team is located. Advanced solutions cost more, but working with experienced developers like CISIN helps optimize your budget without cutting corners. CISIN's fintech expertise has helped many startups launch successful products while keeping costs in check.
A smart monetization plan combines merchant fees, late payment charges, premium subscriptions, and ethical data usage for long-term success. These revenue streams create a business model that works for everyone when balanced right.
The BNPL market keeps growing stronger. You now have the knowledge to create an innovative payment solution that modern consumers want. The real question isn't about entering this market - it's about how soon you can launch your BNPL app and grab your share of this thriving industry.
