As COVID-19 Continues to Fuel E-commerce, Buy Now, Pay Later Programs Evolve

Elva Mankin

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According to CB Insights, there are 67 fintech unicorns with a combined valuation of $252.6 billion. And notably, standouts from this list include “buy now, pay later” companies who, as e-commerce continues to rise during the coronavirus pandemic, have experienced exponential sales.

In May, PayPal reported having 325 million active accounts, having gained 7.5 million new accounts in April alone. And in June, the company announced it has expanded its buy now, pay later solutions to France making it one of the first payment installment solutions for small businesses in France. According to data from PayPal, 84 percent of French consumers are more likely to shop again at a retailer that offers installments.

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Splitit also achieved record growth during the pandemic, achieving increased conversion and average order value as online shopping rates soared. On July 8, the company announced it had processed more than $65 million in merchant sales volume, growing 176 percent quarter-over-quarter and 260 percent year-over-year. Total shoppers using Splitit grew 85 percent, and at the same time, the company’s e-commerce retail partners grew 104 percent.

“While the pandemic has significantly accelerated e-commerce transformation for a variety of brands, the payments industry must support e-commerce merchants to better meet the cash management needs of shoppers,” said Brad Paterson, chief executive officer of Splitit. “Our continued business growth and momentum signals that consumers are increasingly more open to and adept at maximizing their existing credit to preserve cash flow, especially when it comes to brands that help them stay in shape, support work, and communications needs and improve their home environments.”

Splitit has partnerships with Visa, Stripe, BlueSnap and a new partnership with Mastercard. Mastercard and Splitit announced plans to jointly develop installment and related products in June. The partnership also gives Splitit access to Mastercard’s payment gateway services and application programming interface technology, which will “enable a systemic, scalable way to offer Splitit’s installment solution through any channel.”

“This partnership with Splitit will help to drive higher transaction volumes for businesses and deliver budgeting solutions in the moment consumers are seeking them,” says Zahir Khoja, executive vice president of global merchant solutions and partnerships at Mastercard. “Our network and global reach, alongside Splitit’s solution, aligns with our commitment of providing choice, control and simplicity to consumers and businesses. Consumers walk away with payment options and businesses get paid in full, building consumer loyalty.”

As consumers begin to reenter physical retail stores and demand contactless payment options, Afterpay has announced that select retailers in the U.S. will offer Afterpay through Apple Pay for in-store payments. Consumers are able to initiate a purchase using the “card icon” in the Afterpay app, which activates the Afterpay card in Apple Wallet. Mirroring the use of Afterpay online, users will pay for in-store purchases with four installment payments without additional fees or interest.

Forever 21, Fresh, Skechers and Solstice Sunglasses are among the first retailers to offer the solution in the U.S. Shoppers in Australia will be able to use Apple Pay to make retail store purchases via Afterpay in upcoming months.

“As we enter the second half of the year, and retail reemerges across the world, there has never been a better time to offer shoppers a new way to pay and drive business growth, both online and off-line,” said Nick Molnar, Afterpay’s cofounder and U.S. chief executive officer. “By giving consumers a budgeting tool that allows them to use their own money over time, with the addition of a contactless payment solution, we can help bring shoppers back to their physical and online stores.”

Afterpay saw success with its in-store solution in ANZ. In 2019, Afterpay’s in-store payment solution represented nearly 24 percent of total ANZ underlying sales with almost 40,000 stores offering the service.

Affirm has also diversified its consumer offerings during the pandemic. In June, the company introduced high-yield savings accounts in its efforts to reinvent the financial system for its largely Millennial and Generation Z audience. The goal is to offer the same transparency Affirm’s consumers get from its payment program in a savings account. Affirm Savings features 1.30 percent APY, no minimums or fees, and optional auto-deposit.

For More WWD Business News:

Merchant’s Guide to the World of Alternative Finance

EXCLUSIVE: Klarna and Cosmopolitan Team to Launch ‘Hauliday,’ a Virtual Shopping Event

Klarna Reveals First Buy Now, Pay Later Loyalty Program

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