Lots of Klarna news this week. Will Klarna may benefit from the “lipstick effect” and spokesperson Paris Hilton? Klarna also launched installment payments for Airbnb guests. Klarna’s UK Director leaves the company as it and other BNPL providers face impending regulations. 14% of UK consumers used BNPL in Mar 2023, up 12% from Jan. 70% of current BNPL users would be interested in using bank BNPL plans. Splitit and APPS partner to enable faster integration and one-click installment payments for existing APPS merchant checkouts.
Clearpay UK added Urban Outfitters and several other high-profile UK retailers. In India, a credit lending crunch at ZestMoney caused BNPL loans to drop 83%, causing the acquisition by PhonePe to run off the rails. Forbes Advisor does a thorough review of Affirm and compares three major competitors. It’s mixed but positive. Fintech Frollo research showed the average Oz pay advance user now spends $749 a month on repayments and fees, up 60% over last year. Ouch! Much more ahead!
Klarna is courting young shoppers with Paris Hilton and TikTok-style algorithms
While all ages increasingly to manage in the cost of living crisis, data shows BNPL is most used by young people aged 18 to 34. To target this audience – Millennials and Gen Zs – Klarna relies extensively on colorful, upbeat social media marketing strategies. Consumers may find this particularly difficult to manage, as our relationship with spending money as a “reward” or “retail therapy” is very much part of Western culture, even in times of economic hardship – the “lipstick effect.” The Conversation
Klarna enables installment payments for Airbnb guests
Klarna and Airbnb now provide guests in the US and Canada with flexible payment options when booking their stay. Guests in the US and Canada can now apply to pay for stays in four interest-free installments over six weeks, and for bookings over $500, guests in the US can apply to pay monthly. More markets will be added throughout 2023. Airbnb is one of the latest retailers to join Klarna’s network of 500,000 partners globally as the company expands into the travel and experiences sector. The Paypers
Klarna UK boss quits but predicts BNPL firm will “trailblaze” in payments and banking
Klarna’s UK boss Alex Marsh announced that he was stepping down after nearly five years with the firm. Marsh, who joined the Swedish buy-now-pay-later leader in 2018, described his time at Klarna as “nothing short of phenomenal.” He highlighted that Klarna’s customer base grew from 1.5 million to a “staggering” 18 million users during his leadership. But, the company and competitors face UK regulatory headwinds as new regulations loom. Marsh cited personal and family reasons for his departure. City AM
Buy now pay later schemes used by 14% of UK online shoppers
Recent data indicates an increasing adoption of BNPL schemes. In the UK, figures from March 2023 showed that BNPL was used in 14% of all online purchases, marking a notable increase from 12% in January 2023. Clearpay Day, a recent shopping event, saw a 31% increase in customers referred to merchants via Clearpay’s Shop Directory. Key highlights include a 33% average uplift in merchant sales and a 38% average increase in new customers using Clearpay. Fashion United
What does big tech breaking into BNPL mean for banks?
Research in partnership with Deloitte found 41% of consumers say they are more likely to shop at stores that offer BNPL. Research from RBC Capital Markets also found increases of 30-50% in average order value and a 20-30% improvement in sales conversion when BNPL is offered. Another consideration with BNPL is its impact on customer retention. AeroMexico, which uses travel BNPL provider Uplift, found customers using BNPL are 25% more likely to make return purchases. 70% of current BNPL users would be interested in using BNPL plans from their banks. Finextra
Tom Ford and URBN among retailers adding Clearpay’s pay-in-4 service to stores
Clearpay is making progress in the UK with new retailers added to the BNPL roster, including Tom Ford, MAC, Jo Malone, Cosmetic Company Stores, Le Labo, Too Faced, Free People, and URBN, the owner of Urban Outfitters. 14% of all online purchases in March 2023 used the “pay-in-4” feature, up from 12% in January and contributing to £1.2 billion ($1.49 billion) worth of orders. Clearpay said it sends more than 1 million customers daily to its merchants. FashionUnited
ZestMoney crisis is emblematic of deep woes in BNPL space
Indian fintech ZestMoney has seen three founders quit after its acquisition by PhonePe fell through. ZestMoney is among India’s larger BNPL players but appears to have run into troubled times. Other global BNPL players also seem troubled. RBI’s interventions on cards issued by BNPL players and the FLDG have caused trouble. Zestmoney disbursals fell to Rs 100 crores ($12 million) from a peak disbursal rate of Rs 600 crores ($72 million) as NBFC partners cut down on lending. Swarajaya
Splitit and APPS announce partnership to simplify ISO & ISV installment payments
APPS will integrate Splitit into its processing platform and enable Splitit APIs via its front-end to offer its network of ISO’s, ISV’s and merchants a seamless, simplified way to adopt card-based installments. Splitit’s white-label platform delivers one-click installments embedded into the merchant’s checkout flow. Automotive, healthcare, education, and furniture industries could benefit. Cision
Affirm Buy Now, Pay Later Review 2023
Affirm is one of the largest buy now, pay later lenders in the US, offering payment plans for online and in-person purchases. Loans from Affirm allow you to pay for purchases over time, including a no-interest option and an option to spread payments over three, six or 12-month installments. Affirm is best if you can only afford a necessary purchase by paying for it over time. The ease of getting a BNPL loan makes it easy to overborrow, so before taking on one, ensure you can afford the monthly payments. Forbes Advisor
How Open Banking can shut down BNPL debt traps
BNPL is taking on a whole next-level meaning as almost one-quarter of the rising number of Australians using BNPL pay off those debts with their credit cards. Regarding pay advance (access to wages before they’re paid), the latest research from Q1 2023 shows the average user now spends a whopping $749 a month on repayments and fees, up 60% over last year. According to open-banking fintech Frollo, many of these younger Australians are already battered by rapidly escalating rents, mortgage rates and other rising living costs. Australian Financial Review