Dropping some Buy-Now-Pay-Later Knxledge 🤓
BNPL – The highly publicised and often criticised space is still confusing for most…
Klarna, might be biggest devaluation ever in the market, $46bn to $6bn! Does everyone get tarnished with the same brush and is all BNPL a one size fits all industry with everyone competing for the same pie?.. 🤔
Firstly, the playerz are going after very different markets.
B2C – Klarna, Afterpay, Affirm to note. This is an (currently) unregulated space where a merchant can sign up and get paid quickly whilst the BNPL provider takes on the debt relationship with the end-customer.
Most B2C BNPL providers are only lending to end customers in the ‘prime’ segment, meaning they’re pretty risk averse and generally operating in the retail space. Although we are seeing them targeting other verticals now.
A lot of the providers tend to operate in limited geographies, although in the B2C space, they may not technically, be limited.
It’s still open for debate whether these prime services actually do increase checkout conversion in all scenarios but we’ve been impressed with PayTomorrow a service that includes lending to US folk who, for whatever reason, may not be approved by the prime lenders. PayTomorrow cover the spectrum of customers and therefore conversion at checkout is far more likely, I talk to Chris Talevi in the video where you can find out more.
Then you’ve got B2B BNPL, which has actually been around in one form or another for many years, think invoice financing or even factoring. The B2B space plays by stricter rules than its sister. And as I mentioned there are different flavours and the finance can be structured differently, so it’s worth looking into how each party works and what you really need. Some have a relationship with you and some lend money to your customers who need to pay you.
It seems like there are new entrants to this market every week…