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~ APEXX ~

WHY WE MUST

EMBRACE

‘BUY NOW PAY

LATER’

Text: Rodney Bain, Co-Founder and Chief Strategy Officer at APEXX Global // Photos: APEXX, Andrea Piacquadio, Pexels
Regulators and consumer watchdogs have raised concerns, but with the right supervision,
everyone can win.

he recent rise of ‘Buy Now Pay Later’ (BNPL) no hidden fees lead to over-spending. It’s also been suggested
has been quite remarkable. BNPL products that BNPL users aren’t always aware that they are entering
Thave flooded the market and, in the process, into credit agreements that could result in late payment fees.
revolutionised the online retail and consumer credit Another consumer issue highlighted includes the requirement
market. In the UK, the use of BNPL products nearly for consumers to first contact the merchant to get credit for a
quadrupled in 2020 and is now at £2.7 billion, with return or refund, unlike credit card issuers, which typically stop
5 million people using these products since the start payments when a transaction is disputed.
of the pandemic. Klarna, perhaps the most well-
known company in this space, is now the second most Earlier this year, the UK’s Financial Conduct Authority
valuable fintech startup in the world (after Stripe) published a review that concluded that regulation was essential
after it recently announced a $45.6bn valuation to protect users of BNPL products and make the market more
at its latest fundraise. The rise of BNPLs has left sustainable. The review came up with 26 recommendations,
traditional credit providers, banks, online merchants, including affordability checks, provision of debt advice, making
payment providers and regulators alike all around the more alternatives to high-cost credit available and ensuring
world scrambling to keep up. that regulation does not focus simply on affordability but
on conduct across the lifetime of the product. Meanwhile,
The benefits of BNPL to the consumer are well known. Australian regulators are reviewing rules for BNPLs, and
Customers can pay for goods in instalments, with no interest experts have also predicted greater scrutiny in the US under
charges, giving them much more flexibility than a traditional the Biden administration.
credit card. In turn, e-commerce providers are able to keep
their customers happy with more payment options at the While we await the form of any upcoming regulation, it’s clear
checkout. Another big player in this space, Clearpay, has said that some of the suggestions from the UK’s Woolard review
that on average, firms using its service experience a 30% boost are eminently sensible. BNPL has brought simple, flexible and
in the value of orders. Having BNPL options on your website instant purchasing power to the consumer, but it can’t be at
has become a must for retailers in order to maximise sales. the expense of responsible lending. As UK MPs were right to
point out, no one wants to see another Wonga, and I absolutely
This, however, has given rise to criticism and brought BNPLs welcome regulatory scrutiny of the sector to ensure all
into the view of regulators. Critics argue that many of its customers are treated fairly by raising standards in responsible
Millennial and Gen-Z userbases are taking on debt that they lending.
cannot service and that the lure of interest-free instalments and

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