As Buy Now Pay Later skyrockets in Norway, new regulations look set to come

BNPL in Norway: A billion-dollar industry 

Buy Now Pay Later (BNPL) is rapidly gaining popularity in Norway. According to a report from Research And Markets, Norwegian BNPL payments will reach US$6.1 Billion in 2023. This payment option is increasingly attractive to consumers as it can provide more flexibility and convenience when making purchases, compared to paying upfront via card or bank transfer. 

In this article, we explore the rise of BNPL in Norway and the factors driving its growth. We will also examine the opportunities and challenges that BNPL providers face in Norway and the potential implications for consumers and businesses alike.

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What is BNPL?

Buy now, pay later is a type of payment service that allows consumers to purchase goods and services immediately, but delays the payment for them over time. This service is offered primarily by online retailers, but BNPL as an instore option has become increasingly popular over the last year.

The payment schedule is usually weekly or monthly, and the total cost of the purchase is divided into equal parts over the course of the payment period. Most BNPL providers don’t charge any interest or payment fees, however some charge for overdue payments.   

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Why BNPL is growing in Norway

BNPL is expected to account for 25% of all global e-commerce transactions by 2026, (up from 9% in 2021 according to Juniper Research) and Norway is certainly driving the trend with 18% of e-commerce transactions paid by BNPL in 2021. 

In Norway, the COVID-19 pandemic accelerated the adoption of BNPL services; both as online shopping increased and as consumers sought more flexible payment options to manage their finances during times of economic uncertainty. 

This flexibility is particularly attractive to consumers who are struggling with their finances or who are uncertain about their future income. However, it also provides freedom for those with good economy to make their finances work better for them. As economic concerns continue to impact the global economy, consumers are looking for more flexible payment options to manage their finances.

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Nordics lead the way with BNPL

The Nordics have a long history of being at the forefront of innovation. They are known for their high living standards, strong economies, and tech savvy populations. It's no surprise that they have embraced BNPL as a payment option.

One of the reasons why the Nordics have been quick to adopt BNPL is because of their strong e-commerce culture. 

Furthermore, the Nordics also have a number of home-grown BNPL companies that have become successful on a global scale. Klarna, a Swedish BNPL company, is one of the most well-known and has expanded its services to over 18 countries. 

Will BNPL be regulated in Norway? 

Today in Norway credit such as mortgages, bank loans, and leasing are all regulated with ongoing discussion of additional tightening, extension or addition. However, BNPL payments are currently not covered by these regulations. 

Yet, this does not mean they are not coming. In Denmark new regulations will come into play on July 1, and across Europe scrutiny is increasing. Law makers in individual countries and the EU are currently discussing how to implement consumer protection directed regulations on BNPL providers.

With the popularity of BNPL in Norway, the introduction of new or updated regulations is a when, not an if and providers need to ensure they are prepared.

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How Monthio help banks and loan providers

Monthio is a critical solution for banks and loan providers who want to adhere to current and future legislation on creditworthiness.

Monthio’s intuitive creditworthiness solution uses open banking who & other financial data to provide a 360 financial overview of loan applicants in real-time including - but not limited to - income and expenses verification and extensive insight into risks and warnings. 

All the consolidated data is presented in one easy-to-use dashboard meaning quick and easy decision making for credit advisors.

But Monthio’s solution does more than just help financial institutions adhere to regulations, it also helps optimize customer experience & operational efficiency, by reducing time and pain of loan applications.