If you've been shopping online for several years, you've probably noticed an increase in the number of payment solutions available at check out. The newest addition is the option Buy Now Pay Later (BNPL), a deferred and dematerialized payment solution.

The name says it all... or does it ?

As the name suggests, this online service allows you to buy now what you need. As for the payment, in reality it is not deferred... but spread out! It is usually done in 4 equal installments: one right away and 3 others on the same date during the next 3 months, all without paying interest. A flexible payment solution and the gratification of getting instantly what you want, what else? What more could you want?

The e-merchant partners with third-party lenders, such as Affirm, Afterpay or Klarna, to integrate this loan service among his payment methods. Thanks to these fintechs, he benefits from a real security since they take care of collecting the fractional payments from the consumer and pay him the cash payment minus the interest. With this fast and smooth payment solution, he ensures that his customers do not give up when they pay because they find the payment process too long.

A booming market

Credit specialists from the world of retail, such as Oney and Floa Bank, are the pioneers of monthly installment payment plans. Today, the historical consumer credit banks (Cetelem, Cofidis, Sofinco) and the payment giants (Paypal) are in turn extending their offers to these payment solutions. With the rise of e-commerce, fintechs such as Alma or Pledg in France have specialized in online and in-store fractional payments by raising significant funds to launch their platforms. As a result, global sales using BNPL amounted to $93 billion in 2020 according to Bloomberg Intelligence.

If you have enough financing to launch your BNPL offering and take on the role of third-party lender to retailers, this market represents a real opportunity for you. As the interest rates charged to e-retailers are lower with BNPL, you will have to play on volumes to generate margins comparable to those of consumer credit, taking advantage of the weak framework that BNPL enjoys. Indeed, if the amount is less than 200€ and the duration of the loan less than 3 months, it is considered as a payment facility and not a consumer credit, and is therefore not subject to the Lagarde law (2010).

In order to generate high volumes of sales, you need an algorithm capable of meeting 3 constraints: maximizing the customer acceptance rate, minimizing the risk of default and fraud, and making a near-instantaneous return (Time-to-yes). The information required to perform this scoring is generally less restrictive than the one required for a consumer credit: it includes data from the customer profile, a telephone number and a bank card number. This process can be accompanied by a comparison with the National Refund Incident Files and the Anti-Money Laundering lists.

Now that you know how it works, all you need is a platform!

BNPL at your fingertips

You can spend weeks integrating complex software into a platform... or you can focus on your core business using Basikon!

This interface with integrated payment system allows you to manage the entire life cycle of any type of financing such as BNPL.

It orchestrates for you the collection of data from your customers, the management of the decision process and the processing of financial flows connected to banks in EBICS and SEPA format. Capable of interacting with all the actors involved (banks, e-traders, end customers), it offers you an integrated platform capable of managing the entire contract acquisition and management chain. Thanks to its integrated APIs, this SaaS system can be easily and quickly integrated with third-party sites to operate the payment in 3 or 4 times.

Do you want to adapt the subscription path (information request and scoring process) of your customers according to the number of items purchased and the amount of money involved? With the Basikon platform, you will be able to handle all cases by calibrating the accuracy and nature of the information requested at the time of finalizing the purchases.

If it is important for you that your technical teams keep control of the configuration of your platform at all times, you should know that with its low-code editor, Basikon remains 100% configurable to adapt to any type of use case as well as to the evolution of your business model.

If you want to know more, contact us here.