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Millenials jumping onto "Buy now Pay Later" bandwagon amid pandemic

Updated: Apr 5, 2022

Co-Authored by Maryam Gul and Bhavya Gupta

Are your heart’s desires larger than your paycheck? Do you have your eyes on the newest IPhone 13 Pro Max but your savings will not allow you to get one? Fintechs have got your back...
Targeting those who are ignored by traditional banks

New fintech players are carving out a new market to provide consumers with credit solutions. “Buy now Pay Later” (BNPL) solutions have grown significantly - especially with the onset of Covid-19. Today, algorithms and data communications systems have created the ability to check credit records instantly and approve a loan on the spot, making the process faster and convenient for customers. Almost 50% of millennials, who are the bigger part of the consumer credit picture, would abandon their purchase if the process took too long. Such a BNPL scheme aims to deliver a seamless customer experience.

Paypal, Ahead in the Race.

Whilst Klarna and its likes are stealing the limelight, Paypal remains the most competitive BNPL provider. Paypal provides financing at the checkout pages of millions of stores - including Coach, Uniqlo, Bath and Body works. This allows customers to split the purchase in 4 payments, every 2 weeks. The best part? They’re interest free. Revenue by paypal used to be derived when customers fail to pay the installments on time but now it has abolished even the late fee. If a customer fails to pay as per its plans, the customer will simply have a lower credit score when being evaluated for the next loan.

In other words, Paypal is the most competitive BNPL provider out there simply because it is taking on this risk for free and has the capital to be able to pay for customers first. Other firms, especially those starting out may not be able to provide such benefits.

A rising star...

Afterpay, did not have a name like paypal to start with, but has risen dramatically in the past few years. Launched in Australia, it was sought after by many companies and just a month ago it was announced that it would be acquired by Square. In Singapore alone, we see the competition in BNPL services between Atome and Hoolah. Even Grab has started BNPL services now.

The space of BNPL is interesting as it is gaining traction now, more than ever. Which company would emerge dominant? Or would banks fight harder by providing their own BNPL solutions?

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