This new episode is dedicated to Buy Now, Pay Later – BNPL – and the pandemic impact.
What does BNPL really mean? How new players are reshuffling the deck in consumer finance? How is the European regulation landscape evolving? Many questions we are going to discuss with our guests, Oyvind Oanes and Bruno Joux – both partners at Exton Consulting from the Munich and Paris offices, and Rolf Cederström, Managing Director for Europe at ClearPay.
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“Defining ‘Buy Now Pay Later’ is actually not that complicated, as it’s ultimately a product or service that allows consumers to make purchases now – and then split the purchase price into a given number of installments over a defined time and/or pay the entire amount off at an agreed future time. And it is actually not a completely new concept, but it is taking new forms and shapes driven by the increased digitization, growing e-commerce as well as new players disrupting the space.”
“The reasons for the rapidly growing popularity for these BNPL products are various but clearly linked to the strong growth of online shopping which has been growing at more than 12% annually across the EU since 2017, and by 26% in 2020 alone. The increased acceptance of consumers to use mobile banking solutions and the growing awareness of BNPL as a payment alternative has also paved the way for an extended offering in that space. We must say as well that the COVID-19 pandemic has made this a ‘perfect storm’ shifting more business to online, increasing consumer confidence in shopping online and increasing the need for managing personal cash-flows at least for a part of the consumers.”
“Our model is fundamentally different and unique. This is a service like you said that has been around forever and mainly delivered by traditional banks and consumer finance companies.Their model is one which is not aligned with the merchants which are our key clients because the banks are really interested in having the merchants’ consumers as their own customers. So typically what happen is that once you have an installment product at the check out of the merchant, what the bank is interested in doing is cross-selling a larger, more sticky financial product like a credit card. It goes so far as actually, merchants will get paid by banks to show their offer on the checkout page. We operate in a fundamentally different way because we do not have other products.”
“We operate in a fundamentally different way because we do not have other products.What we do is, we are perfectly aligned with the merchants, because all we want the merchants to do and the consumers to keep on transacting with the merchants. We do not charge any interest to the consumer. So the consumers have a high affinity to both use the product and repeat using the product because we built that type of trust in our ecosystem of merchants and consumers. And it means that we have completely different economics and dynamics compared to a traditional banking solution.”
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