Insights into Payments and Beyond

Who’s Who in Buy Now, Pay Later

Global mapping of key players and business models
 Introduction

Anda Kania

Lead Editor for Payments and

Commerce, The Paypers

Buy Now Pay Later industry has massively expanded in the last two years, becoming a useful service for both merchants and consumers.

Providers such as Klarna, Afterpay, or Affirm have already paved a way towards the ecommerce ecosystem, by acquiring new customers and

expanding their footprints. According to Bank of America, the market for these apps is likely to grow 10-15x by 2025 to eventually process

USD 650 billion -USD 1 trillion in transactions. Moreover, according to a Worldpay report, in 2020, pay later accounted for 2.1% of ecommerce

transactions worldwide, continuing to earn market share, and expecting to double by 2024. One can also observe that while a few years ago

Australia and Sweden were the top markets in this area, now, the UK and the US are catching up on this. BNPL equates to around GBP 9.6

billion in annual spending in the UK, while in the US accounted for almost USD 20 billion in 2019.

Considering the size of the market, the myriad of BNPL providers worldwide, and the different ways this service is distributed, we bring out

to our readers the full picture. In this first edition of our Who’s Who in Buy Now, Pay Later, you will find:

• an accurate picture of the players in this space mapped worldwide: Europe, Asia, Americas, Middle East and Africa, and Oceania;
• several examples of business models from companies such as such as Klarna, Affirm, Splitit, Uplift, AfterPay, Atome, Divido, and many
more, with insights into:

- payment instruments
- credit check
- credit application
- late fees
- interest rates.

The context
BNPL from today had different forms and names decades ago. The pay by invoice method was very popular in the DACH region – where

merchants enabled consumers to first choose and try the goods from the catalogues, and pay for them later on. In LATAM and Turkey,

instalments have always been a common practice, the services being offered mainly by banks and they were also linked to cards accepted

both online and in-store. POS financing was typically used for purchasing items such as electronics, furniture, and other household goods.

This option is still actual and has always been part of the shopping behaviour worldwide.

At present, there is an uplift in the usage of BNPL solutions for shopping, mostly driven by trends such as Gen Z and Millennials looking for

convenient budgeting tools, and the lack of interest fees in many cases. As well, the COVID-19 pandemic has also played a crucial role in

pushing this new shopping habit further for the obvious reason: it’s financially convenient. Overall, three variables make BNPL services of

today different from the ones decades ago: they are fully digital, with easy access, and zero interest (most of them).

2 Who’s Who in Buy Now, Pay Later  |  INTRODUCTION

 Introduction
The business model
Before depicting how these companies make money, it’s important to understand the terminology. As explained by Business Insider, companies

such as Klarna, Aftertpay, Splitit, Affirm, Zip and (many) more are BNPL providers. Companies that enable their merchant networks to offer

direct providers’ BNPL solutions are called facilitators, such as Mastercard, Shopify or Stripe. And the retroactive providers category involves

mainly issuers that offer financing options consumers can use for all purchases made on their credit card.

Essentially, the providers partner with merchants to give consumers the option to pay for their goods in monthly interest-free instalments.

Merchants pay the provider a certain percent of the purchase amount as a fee, and most of the providers pay the merchants in full and then

recover the money from the customers. On the consumer side, some providers run a soft credit check to make sure the merchants’ customers

are trustworthy. Others look for economic benefit and charge interest of 10 to 30% on the amount, based on the customer’s credit and the

duration of repayment. However, most BNPL providers don’t charge any interest rate as long as they are no delays in paying the instalments.

As per an RBA report, the most common business model involves the provider facilitating transactions by enrolling both merchants and

consumers into the agreement. In this type of ‘two-sided network’ that is mainly common for Klarna or AfterPay, consumers typically set

an account via the provider’s app or website, and spending limits are often approved on a per-transaction basis. Merchants that enter into

agreements with BNPL providers pay a per-transaction fee for accepting BNPL payments, which tend to be high relative to the cost of accepting

debit and credit card payments.

As well, these services can be offered through virtual cards via the providers’ app, and they can be used for both in-store and online purchases.

Unlike the two-sided model, this scenario doesn’t involve an agreement with the provider. The BNPL company issues a one-time-use virtual

card to the consumer, or the virtual card can be re-used and comes with an overall limit. TwistoPay is a good example of this model.

There is also an option for the consumer to pay via instalments with their credit or debit card like Splitit or Oney offers. BNPL providers lend

money to the consumers without charging interests yet applying fees for delayed payments.

And there is also the matchmaker model (extensively explained here), specific to companies such as Creditclick or Divido, where the provider
brings together the merchant and the consumers, and the payment is facilitated by the PSPs that merchants work with.

The BNPL business model was also embraced by bigtechs, such PayPal, more recently. PayPal has introduced in March 2021 short-term,

interest-free payments services to its financing options with PayPal Checkout: Pay in 4 (available in the US and France) and PayPal credit

(available in the US and UK). As well, in 2020, Visa kicked off its BNPL pilot in the US, and Mastercard has pilot tests in progress with its

Mastercard Consumer Installment (MCI) platform outside the US.

We kindly invite you to check the in-depth research we made, to learn who are the key players in this industry and their economics. Feel free

to share this project in your community and connect with us!

3 Who’s Who in Buy Now, Pay Later  |  INTRODUCTION

Buy Now, Pay Later –
Global Mapping

- Europe
- Asia
- North America
- South America
- Middle East
- Africa
- Oceania
 Buy Now, Pay Later
Europe

The Nordics

UK

Netherlands Germany

Russia

Poland

Belgium

Switzerland Austria

Portugal

Romania

France

Spain Italy

5 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Global Mapping
 Buy Now, Pay Later
Asia

CIS countries
(Uzbekistan and Kazakhstan)

Japan

China

Vietnam Taiwan

India

Hong Kong
Philippines

Thailand

Singapore

Malaysia

Indonesia

6 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Global Mapping
 Buy Now, Pay Later
Americas

Canada

US

Mexico

Colombia

Brazil

7 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Global Mapping
 Buy Now, Pay Later
Middle East and Africa

Turkey

Israel

Bahrain

Saudi Arabia

UAE

Oman

Nigeria

Ghana

South Africa

8 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Global Mapping
 Buy Now, Pay Later
Oceania

Australia

New Zealand

9 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Global Mapping
Buy Now, Pay Later –
Examples of business models

- How it works
- Payment instruments
- Credit check
- Credit application
- Late fees
- Interest rates
 Buy Now, Pay Later
Examples of business models

Business model During checkout, Upon acceptance Consumers Standard BNPL 1. Customer checks
the customer of the credit complete their with a fee taken on out with Atome
applies for Affirm application, a purchase, while the merchant and at 0% interest,
credit. Affirm shopper is able not yet paying for sometimes on the no admin fee,
performs a ‘soft’ to pay for the the goods – this consumer as well. and splits
credit check. purchase in four can be done later shopping bill into
Affirm settles the equal installments when the consumer 3 easy monthly
full amount with per two weeks. is certain to retain payments.
the merchant and the products. 2. Merchant will
services the loan AfterPay then receive full
directly with the sends payment transaction
customer. instructions to the amount (minus
consumer. They MDR – Merchant
can pay via the Discount Rate
consumer portal/ – fees) within
APP or via classical 3 working days.
bank transfer.
Consumers also
have the flexibility
to pause a payment
or convert it to an
instalment plan.

Payment One-time-use Credit or debit card No card needed Cards, SEPA DD Credit card,
instruments virtual card, debit to start instalment debit card, local
card plan. Independent e-wallets, direct
risk scoring. bank debit,
integration with
PSP platforms

Credit check Yes Yes Yes Yes Yes

Credit application Yes Yes Yes, using local Yes No

standards

Late fee 1.5% of purchase USD 8.00 initial fee Dependent on We’re one of the More information
amount, reported and an USD 8.00 country, order only lenders that available upon
to credit bureaus fee for every 7 days value and step of has never charged request
dunning. Starting at a single euro in late
EUR 2,50. fees.

Interest rates APR ranges from 0% Starting at 0% We do not view it No interest for
10% to 30% as interest but a users
depending on plan fee as a % of the
and credit. transaction amount.
The fee is between
2 and 4%.

11 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Examples of business models
 Buy Now, Pay Later
Examples of business models

Region

Europe UK Switzerland, France

Austria,
the Nordics,
Germany, Belgium,
the Netherlands

Asia Singapore,
Malaysia, Indonesia,
Hong Kong,
Thailand, Vietnam,
the Philippines,
mainland China,
and Taiwan

Americas US US, Canada

Middle East + Africa

Oceania Australia,
New Zealand

12 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Examples of business models
 Buy Now, Pay Later
Examples of business models

Business model A consumer can Whitelabel Retail International Offering 0% APR Pay first term at
choose CreditClick Finance (BNPL) Payment Facilitator instalments from the checkout with
as the method platform (Cross-border) 4 months to 12 iDeal, second and
of choise on the months third term within
payment page of 30 and 60 days.
the merchant: (1) An No catch.
existing CreditClick
customer pays
with username,
password, and
second factor. (2) A
new to CreditClick
customer fills the
form and sends
this to CreditClick.
The loan is
granted/declined
instantly. The
merchant receives
authorisation and
full settlement is
received the next
working day

Payment No specific Flexible – can be Credit cards Slice it & Flex Basic Digital account/app
instruments payment instrument configured for (Mastercard, Visa, coming soon (Pre-
required bank/retailer elo, Hipercard, release available in
Diner’s, AMEX) Android and Apple
App Score)

Credit check Yes, for new Yes – flexible and No (not required) Yes No
customers. Existing configurable
customers access
their accounts
via username
password and a
second factor.

Credit application Yes, for new Yes – flexible No (not required) Yes No
customers.

Late fee Differ per country N/A – this is down N/A – fully insured Yes In3 has no late fees
to our lenders and within 30 days.
retailers. Not set In case of non-
by us. payment, the bill is
eventually handed
over to a debt
collector.

Interest rates The Netherlands Flexible – 2.99% per month Yes 0% – no extra cost
9,9%; configurable by (to user, payable for consumer
Germany 8,9% our lenders and by merchant
retailers at discount if
preferred)

13 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Examples of business models
 Buy Now, Pay Later
Examples of business models

Region

Europe The Netherlands, UK, Germany, UK The Netherlands

Germany France, Spain, Italy,
the Nordics

Asia

Americas US Brazil US

Middle East + Africa

Oceania

14 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Examples of business models
 Buy Now, Pay Later
Examples of business models

Business model The customer Patented Whitelabel BNPL Virtual card/cash BNPL
sets up a Klarna technology enabling
account, and aggregation of
completes the micropayments/
checkout process micro contributions
using only their and later
email address and payment. Running
mobile number. Tab allowing
Klarna settles the contributions and
full amount with to buy individual
the merchant and pieces of content
sends the invoice without upfront
to the customer registration or
via email. The cus­ upfront payment,
tomer has 14 days facilitated by the
to pay the invoice ‘use now, pay later’
or convert to an approach.
installment plan.

Payment Credit card, debit Debit card, credit Debit and credit Virtual credit, direct Cash, auto-debit,
instruments card, direct debit, card, Apple Pay, cards debit and bank transfer
bank transfer, Google Pay
invoice

Credit check Yes N/A Yes No, we use our Yes

proprietary credit
decision engine as
there are no formal
credit bureaus in
these markets.

Credit application Yes N/A No Yes Paidy Plus > Yes

Paidy > No

Late fee Up to USD 10 (US) N/A Up to AUD 15 No No

Interest rates 19.99% (US); N/A N/A 4-15% (depending 0%

18.9% (UK) on BNPL/ cash)

Region

Europe Sweden, Norway,

Finland, Denmark,
Germany, Austria,
The Netherlands, UK

Asia Philippines, Japan

Indonesia, Vietnam

Americas US US

Middle East + Africa

Oceania Australia

15 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Examples of business models
 Buy Now, Pay Later
Examples of business models

Business model Pure BNPL, pay Two-sided network Customers can We charge BNPL
in 30 days or use Splitit to set merchants per
switch and pay up payment plans transactions.
in convenient with their existing
instalments. credit cards without
incurring interest
charges or fees.

Payment Direct integration Direct debit (UPI), Credit card Credit cards, debit Debit card, ACH
instruments with merchants, debit cards cards, mobile
integration through wallets
PSP/Visa card from
Q4 2021

Credit check Soft credit checks Proprietary No No No

(does not affect credit scoring
credit score) independent of
bureau data

Credit application No No, Simpl No No Yes

pre-selects
consumers in close
collaboration with
merchants.

Late fee No late fees INR 100 No We impose late No

(~ USD 1.50) fees (SAR 25) it
will increase every
15 days of delay
with the same
amount. Limited at
150 Saudi Riyals or
25 % of the order
value (the minimum
of the choices).

Interest rates 0% for transactions 0% 0% We are Shariah 0%-36%

paid in full within compliant and do
30 days; not charge interest
0%-15% of rates.
total purchase
value if paid in
4 instalments
(merchant
dependent).

16 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Examples of business models
 Buy Now, Pay Later
Examples of business models

Region

Europe Poland

Asia India

Americas US, Canada US, Canada

Middle East + Africa Saudi Arabia

Oceania

17 Who’s Who in Buy Now, Pay Later  |  Buy Now, Pay Later – Examples of business models
Don’t Miss the Opportunity of Being Part of
Large-Scale Payments Industry Overviews

Once a year, The Paypers releases four large-scale industry overviews covering the latest trends, developments, disruptive

innovations and challenges that define the global online/mobile payments, e-invoicing, B2B payments, ecommerce and web fraud

prevention & digital identity space. Industry consultants, policy makers, service providers, merchants from all over the world share

their views and expertise on different key topics within the industry. Listings and advertorial options are also part of the Guides for

the purpose of ensuring effective company exposure at a global level.

Who’s Who in Payments Who’s Who in Open Banking Financial Crime and Fraud Payment Methods
Report 2021 Report 2021 Report 2021 Report 2021

For the latest edition, please check the Reports section