CONTEXT
Where consumer credit existed for more than 20 years, payment facilities (Buy Now Pay Later…) all gained traction since Covid-19. Today, more and more companies are entering the payment facilities market, resulting in massive fundraising. We are at the meeting point between a Real Customer Need (smoothing out expenses in a context of economic uncertainty) and start-ups that have fully invested in this sector. This market has been shaped by pure-players, who are accelerating and gaining market share in unprecedented ways, without the hindrance of physical stores. These pure-players reinvented payment facilities via simple and fluid paths, which are completely lacking in the offline world.
BNPL DEFINITION
At checkout, consumers benefit from a “Buy Now Pay Later” option, using a fractional payment. In most European countries, below 90 days (i.e., payment in 3 to 6 times), there is no regulation that evaluates or protects the trade including customer solvency (called “scoring”). Beyond 90 days, consumer credit legislation applies.
MARKET OVERVIEW
In November 2021, Shein signed with Klarna. Ingka invested in Jifiti in the summer to offer BNPL payment in-store. Globally, the most advanced markets are the U.S.A., the U.K. and Germany. French consumers perceive e-commerce as too insecure. Where BNPL has not fully deployed in the tourism and travel sectors, it concerns many retail verticals like electronics, fashion, travel retail, furniture, sports, beauty, mass market and luxury. Challenges differ across the sectors, depending on their omnichannel specificities and purchasing behavior. For digital marketplaces, third-party payment is an important issue. In franchise store networks, the breakdown of funds with central and in-store inventory is a sensitive point.