What’s trending in BNPL? A White & Case report highlights recent acquisitions, new capital flow and consolidations, among other things to watch in the fast-growing industry. New research shows nearly half of consumers will delay or not complete a purchase if BNPL is unavailable as a payment choice. LATAM banks have potential BNPL opportunities if they move quickly. Klarna rolled out ChatGPT internally, hoping for efficiency.
Global furniture icon IKEA’s introduction of buy now pay later shows installments are here to stay. Indonesian officials are concerned about rising BNPL defaults, reaching 6.78%. Inflation is pushing Egyptian consumers to use BNPL for essential food purchases. Potential regulations aside, that’s not a sustainable business model! ChargeAfter offers five key factors for merchants to assess when choosing a BNPL provider.
Sector trends – Sept 2023 Consumer Finance – Banks & BNPL
White & Case offer a valuable perspective and insight into trends in consumer finance and BNPL. Among the highlights are acquisitions (Mediobanca’s acquisitions of HeidiPay Switzerland and Soisy), new capital continues to flow (Tranch, Tabby, ZZilch, Klarna), consolidations, partnerships and asset disposals (PayPal sells $40 billion EU BNPL loan portfolio to KKR), more interest-bearing loans (valU-Amazon Egypt), and numerous acquisitions. White & Case
Nearly half of consumers will delay or cancel a purchase if merchants don’t offer BNPL
PYMNTS and Sezzle research shows consumers place high value on BNPL as a payment method, so much so that nearly half of BNPL users would delay or cancel a purchase if a retailer or merchant did not provide it as a payment method. This sentiment was shared by 28% of millennials and Gen Z consumers, highlighting the importance of BNPL for younger consumers. Similarly, nearly 26% of baby boomers and seniors also said they would cancel their purchase if BNPL were unavailable. PYMNTS
BNPL a double-edged sword for LatAm banks
Small and mid-sized banks will likely offer buy now pay later solutions to attract new customers. But only the region’s bigger lenders may be able to move the needle. Many banks are waking up and realizing BNPL is also an opportunity for them. Peruvian bank BCP offers a product called Cuotéalo, which allows customers to make purchases without a credit card. Lenders are looking at this solution with interest as credit cards – one of their main products – are slowly losing share to other payment methods. The Banker
Klarna’s plans for ChatGPT’s corporate iteration
A new version of the ChatGPT generative AI program has entered the market and is getting a quick test in financial services. Klarna has added ChatGPT Enterprise, implementing OpenAI’s application programming interface to provide access for 2,500 employees to get all employees to use the technology. What’s new is a focus on companywide usage, bringing the tools to customer-facing sales and service staff. American Banker
How buy now pay later technology works
Bank of England figures suggest more than three million households in the UK owe £2.7 billion to BNPL lenders. Over £10 billion has been loaned in the past three years. The most active demographic is the 25-to-34-year-olds – who are asset-poor and still working up the corporate ladder. The secret of BNPL is twofold. On the one hand, there is the intelligent use of data to decide who to lend to. On the other, investment in behavioral science. Information Age
IKEA says the time’s right to bring BNPL in-store and online
Christine Briganti, Financial Services Deployment Project Leader for IKEA, told PYMNTS that the growing embrace of buy now pay later helps broaden the Swedish furniture retailer’s reach in the US by improving financial flexibility at the register – online and in-store. IKEA announced that Afterpay’s “Pay in 4” service has debuted at its stores and website for customers in the US. The service lets customers pay for products in four payments over six weeks. PYMNTS
Saving our GenDebt
High default rates on BNPL platforms have given the government and the Financial Services Authority (OJK) a cause for concern. Defaults in BNPL were at 6.78% of outstanding loan value in the first six months of this year, more than half than that of banks at 2.44%. Many may think these are expected and are just part of the high-risk high-reward business of online lending, but every failed payment matters to each individual caught in these bad loans. Jakarta Post
Struggling Egyptians turn to buy now pay later offers – even for vegetables
BNPL is rising in Egypt since last year when the value of the Egyptian pound dropped by more than half after a series of devaluations. The sector is expected to grow by 52.3% this year as awareness rises and struggling consumers seek solutions. But the trend is not limited to fintech companies and purchases of big-ticket items by the more affluent classes. Khaled Alaa, a vegetable seller in Al Asher, a lower-income neighborhood in Nasr City, has begun offering his own BNPL scheme to local shoppers he knows. The National
5 Key factors when selecting a consumer financing platform in 2023
The right POS financing platform forms the backbone of your consumer financing strategy. It merges convenience with financial accessibility, making shopping a less daunting experience for budget-conscious customers. Here are five crucial factors when choosing the best POS financing platform for your business: omnichannel experience, a wide network of lenders, easy integration and management, comprehensive analytics and data, and white-label capability. ChargeAfter