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A FinTech sector such as buy now, pay later (BNPL) solutions grows daily. Along with credit cards, BNPL options help customers and merchants mitigate financial risks and keep money flows alive. For those reasons, BNPL tools experienced unprecedented growth last year.

According to Adam Ezra, cofounder and co-CEO of BNPL service QuadPay,

“In the past three years, QuadPay has grown significantly, serving over 2 million consumers and thousands of retail partners on its platform.”

Geoff Kott, chief capital officer at Affirm, tells a similar story:

“Since Affirm was founded in 2012, we have seen a keen interest in our product evolve over time as consumers continued to be weary of added credit card debt while looking for flexibility to purchase and pay over time.”

The biggest growth is observed at companies that have a distinctive growth vector. When reaching their long-standing goals, they outperform their competitors with a poor understanding of the best growth vector. We analyzed successful BNPL companies to determine what potential growth vectors exist and what companies should look at when searching for inspiration.

Check out the omnichannel approach

The growth of a BNPL solution often depends on integrations with partners and the right focus in road-mapping future integrations. Market leaders often have integrations with e-commerce and payment processing partners to occupy the biggest market share. Some solutions choose to focus on a niche and form close partnerships within the niche, which allows them to dive deep inside customer needs and sharply personalize their proposition. In addition, they may create omnichannel partnerships with other platforms while gathering goods and services provided by partners at one platform. 

Uplift provides a vivid example of the omnichannel approach. Many airline customers shop for tickets before their travel date but don’t purchase them because of the high upfront cost, and the prices are then subject to change. This situation is frustrating for both travel merchants and customers, which inspired Uplift to create a win–win solution. Uplift recently secured a new $68 million credit line as it looks for travel to pick back up in the new year. The company also plans to explore expanding into new sectors.

Uplift | WealthTech Club

Companies using the omnichannel approach attract investors’ money.

Katapult, an omnichannel payment platform that provides alternative purchase solutions for retailers, partners with both online and brick-and-mortar retailers nationwide so it can provide purchasing power to the underserved subprime consumer market. This allows it to grow sales and attract an entirely new customer base. The platform is integrated with payment processors such as Chargeafter, Affirm, and Versatile Credit. Katapult has received total investments of $286 million from CURO Financial Technologies, MissionOG, Blumberg Capital, and Tribeca Venture Partners.

Katapult | WealthTech Club

Affirm

Affirm was listed on the New York Stock Exchange this January, jumping almost 100% to almost $100 per share from the initial public offering price. The BNPL service, which is connected tightly to the travel sector, has a market capitalization of around $24 billion as a result of the IPO. Affirm works with the likes of Expedia, Delta Vacations, Priceline, CheapOAir, Suiteness, and others by offering buyers the chance to secure tickets and accommodations, then spread their payments over a preset schedule.

Pay the bills—later

It’s becoming increasingly common to pay bills, insurance premiums, and school and college payments using BNPL options. The setup is the same as when you buy goods and services online, but there’s one difference—payments are processed via a partner’s platforms. Combined with platforms such as QuickBooks or BPAY, a BNPL solution may occupy a new sector of user needs and revolutionize how people pay their bills.

Top BNPL Tools

To better understand this type of growth, take a closer look at Australian BNPL humm. Its mission is to revamp the way people buy with easy, digital, interest-free financing designed for today’s shoppers, retailers, and SMEs. The platform was recently named Best FinTech Consumer Lender at the 5th Annual FinTech Awards 2020. In July 2020, humm announced a partnership with BPAY, which means its customers can now use humm to pay their electricity bills, insurance premiums, school fees, and more in easy, interest-free bites. 

Guide: How can a BNPL solution grow?

Integrate more e-commerce and payment processing platforms

The BNPL market is big and convoluted, so there’s enough space for conquering companies to integrate multiple processors and e-commerce platforms and snag their own piece of the pie. This type of growth vector allows companies to reach more merchants because they all use different payment processors and get access to the biggest merchants on the market. 

There are several examples of this growth model. 

Top BNPL Tools
  • Mash provides a reliable and flexible payment method. Choose Mash at a payment terminal, and you’ll receive an invoice sent to your home. You will then have 14 days to pay—or you can choose an installment plan. Mash received investments totaling $138 million from Finstar Financial Group and Fortress Investment Group. The platform integrates Ingenico, Domec, Tink, Nets, and Verifone, and its focus is on the Western European market.
Payl8r | WealthTech Club
  • Payl8r is a flexible, convenient, and modern method of paying for goods and services online and in-store. Based in the UK, its goal is to provide customers with an attractive and beneficial alternative to credit cards. Payl8r’s ease of use and range of financing options encourage customers to purchase more of the products they want now at Prestashop, Magento, Shopify, and WooCommerce outlets.
Top BNPL Tools
  • ViaBill provides a smooth financing solution for thousands of merchants and customers in Denmark, Norway, and the US. It’s increasing average order sizes, providing low transaction costs, and focusing on the customer so they can get what they want, when they want it. Viabill integrates Shopify, Prestashop, WooCommerce, Merchants Connections, PayCafe, AltaPay, Manana, QuickPay, ePay, Optile, and Centus as payment providers. Its total investment volume is at $57.3 million.

Keep your API relevant

Because the BNPL business model is tied closely to integrations, it’s crucial that integrations are implemented seamlessly. To do so, reengineering open API and enacting state-of-the-art practices attract new partnerships and allow quicker growth than other market players.

Summary

There are countless growth opportunities for BNPL solutions in 2021. Successful companies’ experiences show there are numerous ways to grow your company depending on its goals and mission. Overall, this market sector will continue to flourish this year, which means it’s time to take action and push your company forward.

About INSART

INSART is a Fintech engineering partner with outstanding knowledge and experience in developing Fintech solutions, assembling dedicated teams for Fintech projects, and managing them in a long-term perspective. We teach our developers financial concepts and foster a culture of financial literacy and well-being across the company. Our expertise saves you at least 25% time comparing to teams inexperienced in the business domain area.

INSART is a leading partner of WealthTech Club.

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