Buy Now, Pay Later (BNPL) is a short-term financing method that allows borrowers to make purchases and pay for them in several interest-free installments. It is also known as a point-of-sale installment loan. The number of BNPL users is projected to hit 59.3 million in 2022 and this number increase close to $700 billion by 2026. Impressive? Why not take advantage of the opportunity and start earning from it today?
In this post, we are going to have a brief overview of the buy now, pay later market and explain the philosophy of the no-code approach, the benefits the target audience can get, and how no-code is different from any other approach.
Reading the first paragraph you realize that BNPL is a fast-growing payment trend with huge potential, especially among the young audience. BNPL payments are prospected to account for about a quarter of all the transactions in global e-commerce by 2026. Moreover, BNPL startups backed by banks' capital and infrastructure show surging growth at the level of 150-200% per year.
It is worth noting that there are a lot of risks around the BNPL payment trend as sometimes it can become a buy now, pay never which means that an extremely easy onboarding process can be a temptation for the non-reliable users to get the goods and simply do not pay for them adding losses to the owner of the service. In this situation, it is very important to have the right and healthy balance between the scoring model and security. Paying enough attention to scoring, digital onboarding, and verification will help you make sure that the overdue rates and the payment avoidance are avoided and you are working with by now, pay later not by now, pay never business.
Let's speak about the existing types of buy now, pay later services that are presented on the market.
E-commerce-based BNPL — split the payment into 3-5-10 installments proposed at the checkout page;
Card-enabled BNPL — a virtual card is issued for purchasing;
Credit BNPL card provided by bank/fintech using BAAS — split the purchase before or after the transaction;
Embedded finance BNPL — provided by any company that deals with payments and has enough data about its consumers;
B2B BNPL — allows SMBs split their payments for anything like equipment, utilities, telco, SaaS, etc.
What kind of software solutions are available right now on the market? We can categorize them into three key groups: white labels, code frameworks, and classical software platforms.
White label solutions provide installments-as-a-service while back-end functions are provided by the platform. They are usually not that flexible in terms of customization, so you can not customize the settings, credit products or simply roll out the new products. The only customization you can get is to brand your BNPL checkout page. This type of software also is time-consuming and it usually takes months to implement.
On the other hand, we have a more effective option called a code framework. Code frameworks speed up the development process and this kind of product foresees that you as a company have your technical team that is going to be dedicated to launching your BNPL business. Code framework solutions usually do not contain anything like user interfaces and cover only some parts of the borrower's journey, like loan origination. This means components like KYC or digital onboarding you should buy separately from another provider.
The concept of classic software means well-known enterprise-focused solutions with the standard toolset for banking. Usually, such classical software platforms are designed with the banks or credit unions as the primary buyer persona in mind, which means the user has to develop their front-end interface. It takes from six to nine months to integrate the software and it is worth adding that such type of software is quite pricey and does not fit the startup budget.
Are there any other options that startups can afford and implement faster than six months? For sure, and such type of software is called no-code. No-code BNPL software foresees the fully automated onboarding process as the modules are usually ready to go. No code approach opens the doors for the companies that are let's say a newly emerging lending business or the newly emerging fintech for more affordable ways of doing business due to low cost and less go-to-market time. For instance, Neofin allows you to launch any new lending product within 1 day.
If you want to learn more about the no-code approach for BNPL products, we would like to share the following webinar where our team demonstrated all the features and advantages of our platform.