ASX Stocks
Is Another Boom in ASX BNPL Stocks Brewing? How Mk. 2 Could Differ from Mk. 1
The Australian stock market has seen its fair share of booms and busts, and one of the most fascinating stories in recent years has been the rise and fall of Buy Now, Pay Later (BNPL) stocks. From Afterpay’s 2016 IPO to its eventual acquisition by Block in 2021, the BNPL sector was once the darling of investors — until higher interest rates, inflation, and regulatory scrutiny hit the industry hard.
So, is there another BNPL boom on the horizon? And if so, what will make it different from the first wave? Let’s break it down.
The Rise and Fall of BNPL: Mk. 1
When Afterpay launched, it completely disrupted how people paid for products, offering consumers the chance to split payments without credit cards. Investors loved it, and soon the ASX was flooded with BNPL companies like Zip, Openpay, Laybuy, Sezzle, and Payright.
But as with any hot sector, competition surged and profits fell. Rising interest rates and bad debts wiped out many smaller players. Some went bankrupt, others went private, and only a handful — such as Zip (ASX: ZIP) and Afterpay (via Block’s Cash App) — managed to survive.
Why a New BNPL Boom Could Be Different
The phrase “it’s different this time” often raises red flags in investing. Yet history shows that some industries can evolve and come back stronger — just look at Amazon after the dot-com crash.
Here’s why a BNPL resurgence could be different in 2025 and beyond:
Consumer demand remains strong: Nearly 2 in 5 Australians used a BNPL service in the six months to March 2024, with Gen Z and Millennials leading adoption.
Inflation is easing, but wages are still lagging, meaning consumers rely on BNPL to manage cash flow.
Survivors are leaner and stronger: Zip, for example, recorded $13.1bn in transaction volume in FY25 (up over 30% YoY) and improved its bad debt ratio.
Global expansion is real: Many companies are focusing on the US and other international markets where BNPL adoption is growing rapidly.
Key BNPL Players to Watch
Zip Co (ASX: ZIP)
Once written off by many investors, Zip has bounced back. It processed over 93 million transactions in FY25, serving 6.3m customers across Australia, New Zealand, and the US. Its focus on core markets and tighter risk management have helped improve performance.
Block (ASX: SQ2) – Afterpay Integration
Afterpay may no longer be a standalone stock, but as part of Block’s Cash App, it remains a key BNPL offering. While Block doesn’t disclose detailed Afterpay numbers anymore, the integration strengthens its ecosystem in the US and Australia.
Affirm (NASDAQ: AFRM)
In the US, Affirm has become the most prominent BNPL stock. Apple even integrated Affirm into its own payment ecosystem in 2023, giving it access to 60m+ Apple Pay users. Affirm reported US$10.4bn in transaction volume and US$876m in revenue in its latest quarter.
Klarna
The Swedish BNPL giant has finally gone public, debuting with a valuation of over US$20bn. With 111m users worldwide, Klarna has returned to profitability after improving on-time payments and expanding its merchant base.
Why BNPL Companies Remain Popular
Despite criticism, BNPL services remain popular for several reasons:
Convenience: Instant approval and easy-to-use apps.
Budgeting tool: Consumers can spread out payments without interest (if they pay on time).
Merchant growth: Retailers benefit from higher sales conversion rates.
For investors, this means the sector still has room to grow — but likely dominated by a smaller number of stronger players.
Conclusion: BNPL 2.0 – Same Concept, Stronger Companies
If a new BNPL boom is underway, it won’t look exactly like the first. Instead of dozens of small-cap startups chasing growth at all costs, the sector now has a handful of stronger, global companies like Zip, Block, Affirm, and Klarna leading the way.
Investors should still be cautious — regulation, competition, and consumer defaults remain risks. But for those betting on BNPL’s long-term future, the survivors of the first wave may be poised to deliver solid returns in BNPL Mk. 2.
⚠️ Disclaimer
This article is for informational purposes only and does not constitute financial advice. Always conduct your own research or consult with a professional financial advisor before making investment decisions.