Around the Buy Now, Pay Later World

Retailers strive to provide payment options Gen Z consumers value, including BNPL solutions

Merchants are working to offer payment options consumers value. BNPL (buy now pay later) is increasingly popular to younger generations whose disposable income limits some purchases in one go. Paying in a "slice & dice" mode is attractive to them.

Generation Z consumers are becoming an increasingly important demographic for retailer. Their spending power develop with time.

Atlanta-based apparel brand BlackCool was recently able to leverage installment payment options to boost its sales by 600%. Afterpay, a PNBL provider grew by 300% in its current 2020 fiscal year. Klarna has doubled its valuation to over US$10 billion. Affirm in the US is rumoured to be nearing an IPO. AfterPay has seen its stock increase 800 per cent this year.

Buy now, pay later: The changing face of finance for a mobile generation.

It's not a tiny little trend. Digital payments leader PayPal just announced it was launching a payment solution in 4 installment, “Pay in 4”. This new BNPL product provides an interest-free, equal instalment plan (https://www.paypal.com/uk/webapps/mpp/paypal-virtual-credit). Visa and Mastercard have recently entered the BNPL market, with Visa Installments and Mastercard’s acquisition of Vyze.

BNPL goes global, with Europe a $347 billion market in 2025

My personal take on buy now, pay later:

• Mobile and mobile-first?is an enabler for BNPL, as help to a frictionless purchasing path that merchants must provide to Generation Z buyers. As soon as a consumer has paid once with a BNPL solution, it sticks on the app or mobile site. The next purchase is easy, quick and seamless. anytime and anywhere from the comfort and safety of their mobile devices.
• Digital application process. By establishing an online application process, new-age consumers do not face cumbersome paperwork. They are not bound to go to a bank or any physical shop. Applications take minutes and as soon as the credit line has been confirmed, consumers can use their credit immediately across a nationwide network of retail merchant partners.
• "I want it now"?mindset of the young generations make the payment method appealing. Over a third of US consumers have already used a BNPL service, according to this recent study by Ascent. A separate report from PYMNTS.com reveals that 87 per cent of consumers aged 22 to 44 are interested in monthly instalment plans similar to BNPL services.
• Retailers use BNPL as sales technique. Microsoft as an example advertises the sale of the new Xbox in monthly payments through a partnership with Klarna in the UK.
• No interest charges or associated fees. Millennials in general increasingly want simpler financing solutions. They have to be easy and hassle-free.
• Bank the unbankable. Underserved and underbanked consumers are looking for simple, easy, financial services that provide them with the flexibility they need. And of course, underbanked consumers get access to services that the traditional banks or financial services not only do not want to provide but simply can't provide.
• "Help me plan". For consumers that are less financially literate, a transparent and simple solution becomes invaluable. They get predictability of the installments payments, when they start and when they exactly end.

Attracting new-age consumers is critical for established retailers. It's a way of enabling consumers that are not yet in active life or just started to work. An offer of installment payments at low- or zero-interest is not an option anymore in 2020.

Stay well, stay safe! Feel free to comment and share your thoughts.

PS: this article was also posted on my website at https://laurentchristen.com/blog/around-the-buy-now-pay-later-world/