BNPL operators in the consumer market have growing challenges, but the gloom about the end of the boom may be overrated as B2B BNPL picks up the pace. So rather than handwringing, I think it’s more accurate to say it’s simply not ‘business as usual’ for BNPL.
Techcrunch sees the pain of BNPL operators through a lens of valuations hit hard, growing delinquencies, and a struggle for profits as operating costs rise and interest rates cause conniptions. The hard rain is hitting Affirm with layoffs of 19% of staff. However, Some analysts point to B2B as a bright spot. Witness the 12% of online purchases in the UK that were BNPL or Splitit’s unique business model and success.
Nonetheless, UK and Australian regulators are carrying out consultations to set standards to protect BNPL consumers. That didn’t stop Westpac from introducing its possibly-compliant BNPL product. Or ECOMMPAY’s new BNPL UK travel industry product. In South Africa, BNPL is just catching stride. So are we at the end of the boom? Depends on your niche and location.
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Is this the end of the BNPL boom?
In a July 2022 report, Fitch Ratings noted some of the largest BNPL providers had seen delinquency rates more than double over the previous few quarters, while credit card delinquencies were relatively flat, “underscoring the BNPL’s lower asset quality.” But, analysts are optimistic about the “underserved” B2B BNPL market, and companies targeting the sector are still raising funds. It’s just not business as usual for BNPL companies. Techcrunch
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B2B BNPL offers a high-potential new chapter in payments
Business-to-business payments are one of the world’s most used financial services, and estimates predict global transactions will surpass $111 trillion by 2027, up from $88 trillion in 2022. Where does B2B BNPL fit in? The B2B BNPL model appears poised for 2023 growth because it facilitates third-party credit and risk-management tools that improve cash-flow flexibility for businesses by accelerating credit approval while mitigating repayment risk and creating profit opportunities. Payments Journal
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BNPL accounted for 12% of UK online spending in Jan
Buy now, pay later (BNPL) fintech services accounted for 12% of UK online spending last month, as the cost-of-living squeeze forces people to spread payments. According to Adobe Analytics, a total of £8 billion was spent online in the UK, with BNPL accounting for 10.7% more than in Jan 2022. People are using BNPL to finance larger purchases, with the average order value in Jan 18% higher than last year. ComputerWeekly.com
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How Splitit’s (ASX:SPT) business model differs from BNPL companies
2022 wasn’t a great year in terms of the sector and valuations. And you’ve also had some recent announcements. Zebit and Laybuy have announced to delist, and then this morning, Openpay announced they’re going into receivership. So, it’s been a sector of kind of boom and bust. And the market’s moved away quickly from growth and funding growth, and it’s now more about cash flow positive. What are your thoughts overall on the buy now, pay later sector, given where we are now? Finance News Network
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BNPL lender Affirm to cut about 19% of its workforce
Buy-now-pay-later lending firm Affirm Holdings Inc announced a restructuring plan to reduce about 500 employees, or about 19% of its workforce, sending the company’s shares down about 18% in aftermarket trade. Affirm’s move follows several US companies, including Goldman Sachs and Alphabet, laying off thousands of employees amid higher costs and a looming recession. Affirm expects to incur about $35 million to $39 million in total restructuring costs. Yahoo Finance
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Britain sets out legislation to regulate buy-now-pay-later credit
Britain on Tuesday set out draft legislation to regulate “buy now pay later” (BNPL) credit, saying the sector posed potential harm to consumers without thorough affordability checks. The sector nearly quadrupled during the pandemic in 2020 to 2.7 billion pounds ($3.28 billion). On Tuesday, the finance ministry launched a public consultation on legislation to regulate BNPL, giving the Financial Conduct Authority (FCA) powers to authorize operators and their activities. Reuters
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Westpac joins the buy now, pay later scene (sort of)
Westpac has finally emerged on the buy now, pay later scene with a product designed to withstand increased regulatory scrutiny. It joins Commonwealth Bank of Australia and National Australia Bank in taking on the once-hot industry. As the government decides how strictly to regulate the buy now, pay later providers, Westpac unveiled a new “PartPay” feature that allows credit card users to pay in four installments if they choose to do so. Australian Financial Review
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BNPL’ gives $1.5B boost’ to retail sector as lobbying ramps up
BNPL operators delivered $1.5 billion in net benefits for retailers last year, according to data from the Australian Finance Industry Association (AFIA), opening a new front of political pressure as the government decides how to regulate a sector that has gone global. Buy now, pay later delivered retailers an additional $804 million in cost savings, including lower marketing spend and fraud rates. Revenue benefits included incremental sales, larger order sizes and better customer retention. Australian Financial Review
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ECOMMPAY launches BNPL service for UK travel businesses
Direct bank acquirer and international payment service provider ECOMMPAY launched its first BNPL product tailored to travel businesses for online bookings. The new payment solution uses proprietary technology and promises to deliver 24/7 customer support with a risk-scoring system based on an individual’s travel circumstances, offering high credit limits for particular travel needs. The BNPL solution contains credit return limits to protect booking agencies and travel agents. The Paypers
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Buy-now-pay-later in South Africa: A farce or the next big thing?
According to data from market research firm KenResearch, South Africa’s BNPL market had a revenue cumulative annual growth rate (CAGR) of 64% between 2019 and 2022 and a forecast CAGR of 35% between 2022 and 2027. The volume of transactions in the market is also on an upward trajectory, with projections of 26% CAGR between 2022 and 2027. New BNPL players include Float, HappyPay, PayJustNow, and PayFlex. Tech Cabal