50 years ago alreadyin 1971, appeared in Spain, from the hands of the Bank of Bilbao, the first debit cards with which to pay in stores or withdraw money from ATMs. A revolution in the world of payments that caught us all by surprise and that could be considered the first fintech. Pay with a piece of plastic without having a balance and deferred?
We are experiencing the next step in the revolution of credit payments right now. The called BNPLor in Spanish “buy now and pay later”, allows you to make installment payments in an evolved and automated way at the point of sale, and without the need to consult a credit institution.
According to several studies, BNPL payments, also known as financing at the point of sale, they can reach 347,000 million dollars in 2025, 30% of the total spending on online purchases. In the United Kingdom, four out of every 100 pounds are already consumed with deferred payments, especially in purchases made by Millennials or GenZ. And in Sweden, BNPL is already the leading payment method in e-commerce. And they are quite realistic figures considering that in December 2020 BNPL payments had grown 109% compared to December 2019, and in February 2021 they had grown 215% compared to the same period a year earlier. In our country, according to Butter, the BNPL market represents 1,220 million euros, which places it number 13 in the world.
Protagonists of financing at the point of sale
Financing at the point of sale, whether in physical stores or online, opens up an important world of options for three types of players.
The first beneficiaries of this new technology are the stores, which can offer their products and services with optimal sales conditions, which will help increase the average balance of transactions and build customer loyalty. For example, can increase your conversion rates reducing cart abandonments by up to 27% and increasing the average ticket by up to 28%. Now that virtually all stores have embarked on the journey to digital, it is essential that they choose solutions that are easy to install and maintain in order to enjoy the benefits of online commerce without the hassle and without losing focus on the business.
In this sense, it is important to bet on aggregators that allow them to keep their customers, since there are some platforms that become resellers themselves and keep the customer information with which to create parallel marketplaces. Count on aggregators Increases financing approval rates. In fact, according to different studies, having different credit institutions on the platform increases credit approval rates by up to 80% -compared to 40% of solutions in which you only connect with a single credit institution.
On the other hand, financial institutions can transparent access to hundreds of thousands of new clients without the need to carry out aggressive commercial actions.
But the great beneficiary is, without a doubt, the consumer, which can control your expenses in an intelligent and personal way without depending on the decision of your bank. That is to say: when the customer chooses to defer the payment of his purchase, the aggregator contacts different entities that offer you the best financing options. This not only allows the customer to access consumer loans in real time with optimal conditions without lifting a finger, but also reduces denials (if an entity’s risk criteria are not met, the system automatically contacts them, without having to do anything, with another and so on until a valid option is found).
Definitely, the world of payments is in full evolution and the focus is now on the integration of new modalities within the trade so that, transparently and in real time, buyers can decide for themselves how to make their payments.
Raúl Legaz, director of alliances and business development for businesses at Fiizy.
