Buy Now, Pay Later (BNPL) allows customers to buy something online, but pay for it after delivery. A BNPL payment can be made in installments over a period of time or as a full payment at a fixed date. Thus, the payment method is a novel variant of purchase on account, for short-term financing of goods.
No traditional banking institutions have to be involved when paying in BNPL installments. What’s more, some BNPL companies even refrain from charging interest rates – a practice that banks still adhere to.
With the economic downturn threatening the margins of online fashion retailers, Buy Now, Pay Later can be a tool to keep customers happy in spending.
In this article, we will have a look at the how and why. We will cover…
Why the fashion industry is under pressure and how BNPL can help
What the core advantages of Buy Now, Pay Later are
What options you have when trying to get a Buy Now, Pay Later solution for your platform
Starbucks could be turning into a bank. Not that they talk much about this fact. But for a few years, the coffee giant doesn’t content itself with brewing up your morning cup of coffee only. They’re brewing up their own financial services, too.
At the center of this venture stands the Starbucks App and the in-house loyalty program Starbucks Rewards. Together, those components have formed an unlikely financial services ecosystem enclosed in the Starbucks brand. The Starbucks App allows customers to order and pay contactless in Starbucks branches. And by paying like this, they also gather loyalty points for the Starbucks Rewards program to spend on benefits.
This development has only accelerated over the years. Yet, it also has suffered pushback in the recent past, when Starbucks changed the loyalty points/free drinks ratio – making some items cheaper and others more expensive in terms of loyalty points to spend getting them. Yet, the outrage only proves how popular Starbucks’ Rewards program is.
And one other popular practice related to the Starbucks App has made headlines over the last years: As user numbers of the Starbucks App rise, so does the amount of money deposited on their prepaid cards. Electronic money laying unused on card accounts… has Starbucks turned into a bank? And is this a business model, other companies might want to adopt?
Well, don’t start depositing your spare change into a latte cup, just yet. Let’s take a look at what’s really going on behind the scenes first. In the following paragraphs, we will explore:
How Starbucks turned from a coffeehouse to a fintech player
Which benefits the company reaps from its financial services
If Starbucks is actually a bank now
How other companies can embark on the same route as Starbucks – and profit from it
Mobile shopping and service platforms make up a huge chunk of online commerce already – 43% of retail is expected to happen via mobile phone in 2023. Now, we see a next-level trend swap over from Asia, which might completely change the game: Super apps. Super apps (also: SuperApps, superapps and super-apps) bundle various digital services into a single consolidated, mobile experience. The term was first used by Mike Lazaridis, founder of BIackBerry, at the Mobile World Congress in 2010, picturing everyday apps that are “seamless, integrated, contextualized, and efficient” and form a closed ecosystem.
Contemporary super apps set out to deliver on this promise. A super app is a collection of so-called mini-apps or applets. Thus, it forms a central access point for services of day-to-day life:
Event and transportation
Customers can access a super apps’ service portfolio via a single sign-on (SSO) instead of multiple accounts. This convenience keeps them returning and increases brand visibility for businesses – which leads to a spread of the app among more users and ultimately higher revenue.
Also, all mini-apps interact with each other in a context-sensitive way. They access a shared pool of customer data. This data gives businesses insights into customer behavior and is used to recommend user specific actions, goods and services within the super app.
But can your company press START and enter the super app market? And what are the benefits of doing so even? This article will cast a light on this. We will discuss:
Who are the big players in the super apps market?
Why are super apps a trend with customers you should not miss out on?
What are your options to power up your e-commerce business with superapps?
How to put an electronic wallet at the heart of your super-app?
After 2 years of Covid-19 pandemic, just when we thought that the hard times were nearly over, reality hit us in February 2022 with the war in the heart of Europe. We don’t yet know what the long-term consequences of the global economic situation will look like, but we already see the impact in different areas of our lives and businesses in the EU. Many countries take care of refugees from Ukraine, support the attacked country with weapons and ammunition, impose sanctions against the aggressor and bear the consequences of these sanctions suffering under the high dependency on Russian gas and oil. The population is struck with high inflation and rapidly increasing prices. Many small businesses struggle to keep their heads above water due to growing energy costs. Startups in different areas experience venture capital funding curbs and shrinking valuation. And fintech is affected by these negative developments, too.
After the record year 2021, in 2022 the investments into fintech worldwide dropped from 226,5 billion USD to 107.8 billion USD. And it’s unlikely that the second half of the year will be as good as the first one. Most likely the deals that were closed in the first half of 2022 were negotiated at the end of 2021 / early beginning of 2022. That means, before the war in Europe and the recession started, under totally different circumstances.
A report by Andreessen Horowitz shows that fintech companies valuations have fallen from 25 times forward revenue in October 2021 to four times forward revenue in May 2022.
“Don’t fear failure, learn from it.” That’s what my coffee cup says.
Easy for it to talk.
Sure, entrepreneurial mistakes can teach us valuable lessons. But honestly: Some failures are nothing you can just brush off. For instance, when you have launched a company and it goes downhill. You will have invested capital and time, plus you have employees you may not want to lay off. In hindsight, it might make a good story for a F*** Up Night. But wouldn’t we prefer if it all had just worked out? A coffee cup does know nothing about the nuances of entrepreneurship.
I can speak from experience. Over a decade ago, my two co-founders and I established our fintech software company trimplement as a German limited liability company. As matters stand now, it turned out pretty well for us. A lot could have gone wrong, though, and I want to help aspiring entrepreneurs avoid such mistakes.
Here are some common failures newly minted company founders face – let me tell you, I know them from experience.
The Metaverse has been one of the hottest topics in business and tech in the last few months. Is this only a buzzword and a hype or does it have a real longer-term potential to become the “next big thing”? You can find supporters for both opinions. However, a lot of big consultancy companies believe that there is no way to fail for the Metaverse.
For example, according to CB Insights “the metaverse could represent a $1T market by the end of the decade”. Deloitte has published a white paper about the potential of the Metaverse and they believe in even higher numbers: “The metaverse may become a paradigm shift for consumer and enterprise behavior, analogous to the introduction of smartphones. It could create a potentially massive new market, with recent estimates of the commercial opportunity as high as $13 trillion and five billion regular users by 2030.” Accenture has launched the Accenture Metaverse Continuum business group to help their clients to understand and make use of the Metaverse opportunities. Its head Paul Daugherty stated that “The next generation of the internet is unfolding and will drive a new wave of digital transformation far greater than what we’ve seen to date, transforming the way we all live and work”.
I’m also rather on the optimistic side of supporters believing that Metaverse is not the hype but a next step in the technological, social and economical development of mankind.
However, before we analyze the current development status and prospects of the Metaverse, paying special attention to the payment topics, let’s review what “Metaverse” actually means and how it is different from “Web 3.0”.
We don’t only buy from them. We also pay with them.
In contemporary e-commerce and digital service platforms, we observe a growing number of players who enter the realm of fintech. Those originally non-financial companies understand that offering embedded financial services has become a key success factor. And for some: A profitable side business (if they can sell their self-built payment or wallet systems to other companies).
Those companies realize their fintech ambitions in various forms: Some just rely on external partners and simply embed financial services, such as insurance or loans. Others have higher aspirations and aim at core payment processes. They want to run their own payment solutions. Perspectively, external enterprises or customers not associated with their primary business should use them, too.
If we had to guess: The former paragraphs had specific brands pop up before your mind’s eye. Apple, Amazon and Google. WeChat, perhaps. And of course, the term “Pay” attached to all of them.
But besides the big names, non-financial companies from various industries have broken ground in fintech.
In the financial industry, we are never shy to celebrate a good rivalry. Neobanks compete with banks who compete with fintechs who compete with Google, Amazon or Apple who compete with each other (and WeChat). Yet, the industry has also become known for promising partnerships. Technical providers, fintech platforms, merchants, telcos etc. combine their resources and expertise.
I can relate: Where partners with different backgrounds support each other, it’s easier to create approach problems from different angles and overcome obstacles (shoutout to my co-founders here). Likewise, partnerships between fintech companies allow them to tackle new portions of the market and improve customer experience or services – and that’s often the goal. What’s more, where technological partners join forces, we can also see huge jumps in innovation regarding infrastructure. Those companies often lay the groundwork for other companies to utilize in their products and services.
For me, the recent co-op of fintech platform Stripe and Buy Now, Pay Later provider Klarna stands as a prime example of this later case. The cooperation of those two effectively presents a straightforward route to BNPL for single online shops and platforms. Online businesses just have to tie in the Stripe integration and their BNPL is basically ready to go.
However, this would not be as significant, if both Stripe and Klarna had not become known for their extensive service portfolio. Stripe acts as a payment facilitator for online marketplaces while, at the same time, being a fintech platform itself. It’s an expression of a trend some in the industry call the platformization of fintech.
If you live in a developed country in the modern world you probably do your shopping on Amazon, connect with your friends on Facebook, book your apartment for holidays via Airbnb, order a pizza at Delivery Hero and call an Uber car if you don’t want to drive yourself.
Each one of these companies is an example of a digital platform business and all together they build a so-called “platform economy”.
There are many definitions of what a “platform” is. In the broader meaning, a platform can be any kind of online sales, transaction or technological framework allowing people to connect for any kind of economic, technological or social interaction. Some sources differ between “online matchmaking” and “innovation” platforms, some mention more types of platforms, for example, “innovation platforms” (like Apple iOS or Google Android), “transaction platforms” (like Airbnb, Etsy), “integration platforms” (combining capabilities of innovation and transaction platforms) and “investment platforms” (like Priceline or OpenTable). There is no unique approach in the classification of the platforms.
In the context of this article, we will look at the digital matchmaking platforms (also called transaction platforms) in the first place, like the above-mentioned Amazon, Airbnb, TaskRabbit, Etsy or eBay. The goal of these businesses is to give their users the opportunity to find a service, worker, resource or product that is best fitting to their needs with the lowest possible transaction costs. We will have a special focus on how those platforms are doing the payment processing part for their customers as we believe that frictionless payment is one of the key success factors for online matchmaking providers. And the most interesting challenge would be to try predicting how the payment experience may look in the next stage of economic development, in the so-calledpost-platform world.
Writing a 2021 recap of fintech has been a tough call. No misunderstandings here: A lot has happened in the industry. But we have gotten so used to the future of payments being both digital and mobile (and some would throw a decentralized in there, too). Long familiar talking points continue rotating in the press:
Embedded Finance keeps breaking through.
BigTech companies still follow their payment ambitions.
Invisible payments in mobile and online payment remain attractive for customers.
Embracing Open Banking is significant for all financial players.
The promises of Artificial Intelligence await around the corner.
So what is to write, when we can expect all of this to define the financial industry in the next years? Well, the devil will be in the details: How will those factors play out on the level of specific target groups, use cases or nations? How is the fintech industry holding up as a whole? And what happened in the crypto sphere?