Buy now, pay later (BNPL) options have made a strong showing internationally in recent months as consumers shift both their buying and spending habits in response to COVID-19 and the resulting worldwide economic downturn. This week saw the latest big entry into the field as Indian firm PayU Finance rolled out BNPL platform LazyPlus, designed to give Indian consumers easier access to credit across both online and offline commerce platforms.
Based on the user's credit history and payment behavior, LazyPlus will offer as much as 100,000 rupees of credit (about $1,363) to users who pay with India’s Unified Payments Interface (UPI) using LazyPay, PayU’s payments platform. Leveraging UPI across omnicommerce networks, LazyPlus gives consumer access to real-time credit, with the money repaid over time with interest using the product’s Revolve feature.
“Since its inception, LazyPay has always innovated to fulfil customers' expectations, demands and evolving needs, LazyPay Business Head Anup Agrawal said in announcing the new product. “LazyPlus is a testament to our efforts in that direction. The solution enables transparent, frictionless and accessible credit transactions to ease the financial complexities of our consumers.”
LazyPay is in some ways a different entrant into the world of buy now, pay later insofar as it defines itself as a “revolving credit line” with an installment option in the form of its Revolve feature. This sets it apart from BNPL firms like Australian-based Afterpay, which describes itself as a “budgeting tool.”
Afterpay North American Division Head Melissa Davis told Karen Webster in a recent conversation that has made BNPL particularly attractive to merchants trying to recreate their commerce journeys for shoppers who’ve made digital transformations amid COVID-19.
“One of the best things a retailer can do is give payment options to consumers to make their purchases as seamless and easy as possible,” Davis said. She added that’s why Afterpay has so widely expanded its merchant partner set over the pandemic’s course.
That’s likely why we’ve seen BNPL make such major strides around the world in the past half-year or so.
Last week, PayPal rolled out “Pay in 4,” its take on interest-free installment loans. The program gives PayPal merchants the option of offering consumers a four-payment installment plan for purchases between $30 and $600. Pay in 4 is currently live in the United States, with expansion plans in the works.
PayPal has also had similar installment payment offerings online in France since June, giving consumers the option to pay off larger purchases with four equal payments spread over three months.
“What we continuously hear from businesses of all sizes is that they are looking for trusted ways to help drive sales [and] attract customers without taking on additional costs,” Doug Bland, PayPal’s senior vice president of global credit, explained to Karen Webster recently.
“At the same time, what we hear from our consumers is they are looking for flexible and responsible ways to pay when they shop. This has all accelerated during the pandemic, and this economic uncertainty has created additional stress for the retailers and for consumers,” he said.
And that global interest in payments in increasingly being pursued worldwide by regional players on top of either the hyper-locally focused or large global tech firms.
For example, Klarna’s BNPL offering enjoys relative dominance in the European Union. That’s helped push the payments firm’s valuation past $10 billion as it looks to expand business.
“Despite the shifting retail landscape, consumers are still looking for inspiration, convenience and value — and it’s become obvious that shopping online now goes far beyond just a transaction,” Klarna CEO Sebastian Siemiatkowski noted in a statement.
In Latin America, white-label BNPL startup Addi is eying an expansion into Mexico and Brazil by year’s end from its current base in Colombia. In Colombia, the platform mainly focuses on helping consumers enable home improvements, elective medical and fashion purchases.
That’s a path Addi intends to continue to follow as it expands throughout the region. Addi finances transactions from $30 to more than $7,000 for a period of three to 24 months. Interest rates that range from nothing to roughly 28 percent.
And while Addi is the best-known regional name in the game, recent Neilson reports indicate the market has become increasingly competitive and crowded in recent months. Kueski Pay, Referencia, and NeoPag are all emerging as competitors.
But increasingly crowded with competition is becoming the global norm in the growing world of installment payments as consumers look for ways to access credit with a greater level of control. Who will win the race with a BNPL product that dominates its market? That’s remains to be seen as the competition continues to unfold.