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.
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.
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.
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.