Buy now, pay later. With crypto?
Each year, our shopping experience is getting more sophisticated. Tech companies partner with financial institutions to make sure consumers can not only access but afford whatever they want.
Don’t have enough funds at the moment? Not a problem anymore! You can still pay for all your whims and wishes using the buy now, pay later (BNPL) service.
What BNLP is All About
Nowadays, consumers can take advantage of BNPL almost anywhere, be it a regular online store or a high-end outlet. The service allows you to pay for the desired item in installments, several equal parts usually, and get the product immediately. It is not the merchant who provides the loan but a third party, and the service is a simpler alternative to traditional credit products.
Compared to credit cards, it is easier and much faster to get approval with BNPL. Also, these instant loans usually don’t imply interest rates; a customer pays a fixed fee instead. It makes expensive items more affordable, and consumers lacking a solid credit profile can still get a loan. Besides, this payment option is highly user-friendly.
However, it’s essential to check all the details of the BNPL offer, such as penalty fees and the 0% interest deal duration. Other downsides of this service include extra fee costs and a high risk of overspending and buying things we do not need.
The State of Current BNLP Market
Buy now, pay later market is rising exponentially. Until recently, only a few popular companies were offering the service, including Affirm, Afterpay, Klarna, Zip, and Sezzle, but a growing number of new players are entering the space.
Apple has joined forces with Goldman Sachs to launch Apple Pay Later. Goldman Sachs acts as the lender for installment loans that allow Apple Pay users to pay for the goods and services in several installments. At the same time, PayPal is releasing its own product, and Amazon and Target are partnering with leading BNPL companies.
As consumer interest rises and new power players come around, regulators pay more attention to the BNPL industry. Consumers are being informed about the pros and cons of the model, and the U.K.’s Financial Conduct Authority’s confirmed to oversee the space. While some fear overregulation, fintech firms stay optimistic about the possibility of clarity, consistency, and proper customer protection when the framework is released.
BNPL Prospects: Blockchain and Crypto
Chances are, BNLP providers will eventually integrate with digital wallets, and cryptocurrency wallets are no exception. Like with fiat money, users could use their crypto funds for installment payments, say via stablecoins or other currencies.
AtPay (@Pay) is one of the BNPL pioneers from the DeFi world. Founded in 2020 in Australia, the company offers innovative eCommerce solutions, merging blockchain and crypto technologies with BNPL concept. As a result, consumers get access to numerous payment methods and lower fees while getting rewards. The platform works with both online and offline stores, and the list of cooperating merchants keeps expanding.
AtPay’s BNPL is a zero-interest service that allows consumers to pay for products in four installments in a three-month time frame without charging late fees. In exchange, shoppers contribute a $6 monthly fee until they settle their debt.
The only difference from other BNPL companies is that AtPay supports specific cryptocurrencies when paying with the platform’s native wallet. On top of that, @Pay rewards its users with its governance tokens if they pay in time.
Recently, the platform announced the launch of its API that will help other BNPL companies take advantage of the blockchain tech, smart contracts, and rewards program. If the leading BNPL providers get on board, the outreach will increase significantly.
Considering the innovative spirit of BNPL projects and the average age of their users, there’s no doubt that at least some of them might be interested in crypto. Another Australian BNLP, Zip, has revealed its plans to launch a cryptocurrency trading feature based on the popular demand of its users. In the future, Zip’s merchants will be able to accept Bitcoin payments.
Another top-tier buy now, pay later provider Klarna gave crypto a chance. The platform teamed up with a cryptocurrency broker Safello to provide brokerage access to thousands of banks in the EU area, using Klarna’s open banking infrastructure. This way, Safello’s users will be able to buy digital assets directly at Safello through Klarna’s payment system.
Those are only a few examples of BNPL platforms openly integrating crypto solutions into their services. If the first results of these collaborations go smoothly, it’s only a matter of time before the two industries start forming deeper business relationships and launching new, cutting-edge products.
The Bottom Line
An emerging buy now, pay later industry has a fair share of benefits and drawbacks. Just like the crypto space, it is still not adequately regulated and raises too many concerns.
However, leading BNPL companies stay content with possible regulations and are eager to integrate blockchain and crypto technologies into their services. We may witness more meaningful fintech partnerships resulting in developing innovative payment solutions shortly.