The world of fintech is not lacking in imagination. This year, a new concept emerged, born in India, against the grain of “Buy now pay later” (BNPL, or split payment) which consists of buying on credit opting for payment in several installments. This is “Save Now, Buy Later” (SNBL). Unlike immediate and impulsive buying behavior, even without having the means available, SNBL offers advantages to consumers if they save over time to buy a good or service.
Like BNPL, more than a new means of payment, SNBL serves a marketing objective for e-commerce sites and specialized platforms: to minimize shopping cart abandonment and bring the consumer closer to the retailer.
A model invented in India
The pioneer of this system is called Multipl, a startup founded in Bangalore in 2020. In India, where the average salary is less than $200, fintech identified the need for an alternative to credit for the high expenses of needy populations with immediate purchasing power. We don’t talk about it much, but the Indian fintech ecosystem is extremely developed, the dynamics based mainly on needs in terms of financial inclusion. For example, Indian start-upmake credit more accessible to the 90% of Indians who are ineligible for bank loans. According to the BCG consultancy, the country has about 7,500 fintechs.
Multipl’s model is to partner with brands, which allow the consumer to obtain discounts (around 10%) while “saving” directly on the account of these brands, or through Multipl, which invests this money over time in financial instruments, using a -house developed robo-consultant. The start-up raised US$ 3 million in May 2022. The platform has around sixty partner brands, including Decathlon, for which it acts as a marketplace, just as Klarna does in the BNPL universe. It is remunerated on an affiliation basis, and the service is free for the consumer.
A trend that gained strength in 2022
This idea has spread since the launch of Multipl. We can name American Accrue Savings, founded in 2021, which raised $25 million from the rich Tiger Global fund in January 2022; Indian Hubble Money, backed by Sequoia Capital, which raised $3.4 million in April 2022; another Indian start-up, Tortoise; or even Monkee, an Austrian application, a particular partner of Booking.com and eBay. Austrian neobank Up has also launched such an offer.
“These start-ups offer these solutions to young people who can no longer or do not want to use credit”explains Pierre Lion, chief growth officer of Mangopay, a French establishment specializing in payment services for marketplaces, responsible for confining and securing funds for Monkee. “For brands, it is a new acquisition channel and a way to retain the consumer before he buys the product. A kind of inverted loyalty program.” “The final price of the product is guaranteed, and the money is recoverable at any time”, he adds. If the purchase is not made, the brand’s contribution to the consumer’s savings is cancelled.
Sell despite falling purchasing power
On average, consumers make their payments between 8 and 12 months. Purchases mainly concern relatively expensive products and services, such as the iPhone, travel, jewelry and, in countries like India, health insurance, for example.
Interestingly, the latest fintech innovations in personal services concern people who don’t have access to credit or don’t want to get into more debt. Last September, US start-up Kafene, for example, raised US$18 million in series B, after an initial round of US$30 million, for its lease-to-buy solution. It allows the consumer to pay for a product in 6 to 18 months and return it sooner if they can no longer guarantee payments. If they make all the payments – calculated according to their credit risk and their financial capacity – they become the owners of the property.
A less favorable context for the BNPL
Coupled with the backdrop of rising interest rates and inflation, which are straining consumer budgets and limiting credit quality, these new trends are developing as BNPL regulations are set to tighten. At least in Europe, where the adoption of the revised consumer credit directive is scheduled for early 2023. This provides for stricter consumer information rules for small credits of less than 200 euros that include payment in installments and a new framework for evaluating the solvency. This is to limit situations of over-indebtedness.
As it is a European directive, each Member State will be free to transpose it into national law. France’s history in this area shows a more rigid application of rules than elsewhere.
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