BNPL : Buy Now, Pay Later — Consumer financing revolution

Buy Now, Pay Later (BNPL) services are a trend that is here to stay. Fintechs, big tech and merchants are forming new alliances to produce attractive and popular financing options that revolve around BNPL. Can you afford to ignore them? How will this affect credit card companies and international payment schemes? And how is BNPL different from instalments, POS lending or credit cards?

Consider the impact BNPL has had on the payments market already:

• Buy Now, Pay Later (BNPL) services are growing at a rate of 39% per year and expected to exceed $260 billion by 2025.
• Klarna, the BNPL unicorn, is now the most valuable EU fintech with a $45,6 billion valuation.
• Affirm has showed figures that indicate that adding its BNPL option raises conversions in merchants by 20%.
• Different reports show that consumers who use BNPL spend more, from 10-40% more than they would with a credit card. One study showed that 35% more customers would make a purchase if they were offered interest-free instalments.

Is there a place in the BNPL world for your company?

There could be, if you are a fintech, neobank, retailer or financer, a card issuer or merchant acquirer processor.  OpenWay, a global leader in digital banking and payments software, has prepared a comprehensive guide on BNPL. We will examine what BNPL is and what it is not, and look at successful BNPL partnerships such as Afterpay and Square, Apple and Goldman Sachs, Amazon and Affirm, and more. We will explore programs launched by fintechs with fintechs, big tech companies with big banks, large retailers with fintechs, international payment schemes with banks, and how this work.

What strategies and technologies are behind a successful BNPL solution?

No matter what partnership a company chooses, the solution with the best customer experience will win out in the end. Since the BNPL experience is digital and data-driven, essential to its success is the technological ability to understand what a customer’s favorite way to pay is in different contexts – and provide it at the right time during the shopping experience. Options are many: pay in instalments, pay in full after 14 days, convert the transaction to instalments after the purchase is completed. There is also the freedom to return an item purchased via BNPL with recalculated interest. This level of personalization and flexibility keeps convenience high for customers. Of course, this places greater demands on the provider’s digital payment platform, which needs to support merchants with quick item payment, delivery, return and reimbursement. Additionally, the platform needs good integration with third parties – essential if your BNPL solution will become the center of a flexible lifestyle app.

What kind of BNPL solution could be most attractive to your merchant partners and cardholders?

Flexible financing options can be offered at any point in the customer experience. Some examples:

• Pre-approved loans for a purchase
• BNPL instalments option at point-of-sale
• Conversion to instalments after purchase was made
• Conversion of a single selected transaction among others
• Ability to bundle different transactions together as one instalment
• Unsecured loans
• SME financing

OpenWay has a long and proven history of helping issuers, acquirers and digital wallet companies increase their revenue via customer-facing credit products and finance solutions. The Way4 digital payment platform enables a variety of BNPL schemes to be realized before, during or after purchase. Read this report to learn what market opportunities and partnerships may be within reach as your organization plans its own BNPL success story!

About OpenWay :

OpenWay Group is the developer of Way4, a digital banking and payment software platform. It covers every aspect of the payments business — account management, card issuing, merchant acquiring, transaction switching, digital wallets, tokenization, and fleet cards. Headquartered in Belgium, OpenWay has office locations around the globe and serves clients in 83 countries.

OpenWay holds a #1 global ranking in software solutions for Payment Processing Platforms by Aite, also by Gartner and Omdia. It was ranked “Market Leader in Digital Wallets” by Omdia and awarded as “Best Payment Software Solution Provider in the Cloud” by PayTech.