Buy-now, pay-later tech we really have to choose who to love?


Back in the 1980s, if you wanted something you couldn’t afford, you had two choices: 1) Credit card it (although many didn’t, as card interest rates were soaring at the time), or 2) Layaway it. Oh, the humble layaway. You’d hand your item over the counter; knowing that in a few sweet weeks or months, you’d get to take it home and have no nasty interest to pay.

And then, the internet happened. By the early 2000s, we were already spending millions online and we were loving it: e-commerce growth rates ballooned, sometimes by double figure percentages per annum, and showed no signs of stopping. But there was one wee problem: where was the layaway?!? Suddenly, we could buy just about anything in the world. But that anything came at a price: exorbitant credit card interest rates. 

Still, we loved online shopping, so we endured it. But then, some time in 2010, a Swedish company came along and answered our layaway prayers (for millions of Europeans, at least). That company was Klarna (and then, on other continents, Afterpay, Sezzle, Quadpay and Affirm to name just a few.) They promised the mecca of online shopping payments: the ability to buy now and pay later...with, in most cases, zero or very little interest. 

Since that time, the concept of ‘buy-now, pay-later’ (also called point of purchase financing or BNPL) has enjoyed astronomical growth in popularity. It’s so popular, in fact, that banks now estimate the size of the opportunity to be worth USD $361 billion. 

On the surface, BNPL is a win-win. Customers get the instant gratification of a purchase without high interest rates. Retailers win too - they get more customers on account, but are also subject to most of the fees - on average BNPL providers charge 4-6% for their purchase, which is, on average, double the amount credit card providers charge (although this largely justified as BNPLs assume the credit risk, including the chargeback risk common in the world of ‘card not present’ transactions). 

But under the surface, critics have suggested the extraordinary growth the industry has experienced may not be sustainable for two reasons. Firstly, BNPL buttons require costly integration with retailer sites - something that many retailers cannot afford. And secondly, retailers simply cannot fit every BNPL button into their checkout process - yet customers, naturally, want to buy-now, pay-later with the provider with whom they’ve created an account. This leads to a paralysis of choice for retailers - who should they choose? Without a resolution to these issues, retailers are forced to choose one (or if they’re lucky, very few) BNPL providers to work with...but does it have to be this way? 

From humble beginnings 

As of right now, BNPL’s largest player, Klarna, is worth a cool $5.5 billion. But for a company this large and successful, it came from quite humble beginnings. 

Back in 2005, Klarna’s CEO’s Sebastian Siemiatkowski was putting meat patties on a conveyer belt at Burger King when he came up with the idea for buy-now, pay-later technology. Soon, alongside his co-founder Niklas Adalberth (also a Burger King employee at the time) and other co-founder Victor Jacobsson, he was pitching the idea to innovators. 

But the initial reception wasn’t great. Siemiatkowski recalls: 

‘We presented our idea, and they [the innovators] said, “Forget about it. It’s never going to work.”’ 

Not discouraged, the team continued on their mission. And shortly after, an observer from the pitch competition approached them to give an entirely different message: 

‘[He said] Look, I don’t care what those guys said. Just go for it, and the banks will never understand what happened.’

And go for it they did. Since 2005, Klarna has raised approximately $1.2 billion from investors, and today has over 130,000 merchants using their service. 

What’s not to love?

BNPL solutions couldn’t have enjoyed such extraordinarily growth without being loved by customers and retailers alike. And one thing’s for sure: they’ve certainly attracted a cult-like following. 

Take Afterpay, for example. It’s so popular that there’s an appreciation group called Afterpay Obsession on Facebook (member count: 37,898) and another called We Love Afterpay, with 13,187 members. Klarna has also attracted fans in high places, with American rapper Snoop Dogg recently investing in the company and simultaneously becoming the face of their latest marketing campaign.

Responses from retailers have also been nothing but glowing, and it isn’t hard to see why. In a day and age where digital marketing is getting more expensive and search engine optimisation is increasingly competitive, BNPL sites can be huge drivers of website traffic. For example, research has shown that the Afterpay site is said to be the second biggest driver of traffic (and customers) to merchant websites after Google itself.

BNPL and the problem with competition

There’s no doubt that everyone loves BNPL. But the issue now is: who should they love? With increasing competition, BNPLs have to work ever harder to attract retailers, which could in turn limit their growth potential. 

So why do BNPLs have to work so hard for retailers, when their benefits are so clear? 

Basically, for a BNPL to work, they need to get the merchant to integrate their individual button, which can be time-consuming and expensive. Given this, retailers are reluctant to integrate more than one - creating what’s been dubbed a ‘pay-to-play’ marketplace where BNPLs have to resort to cut-price marketing tactics and incentives to get retailers onboard. 

Beyond this, even if retailers did agree to install more than one BNPLs, it doesn’t mean customers would use them, as they’d simply have far too many accounts to manage. For example, say a customer had a Klarna and Afterpay account that they used for the majority of their purchases. If they came across a retailer that only had one BNPL integrated, and this particular BNPL was not one with which the client had an account, would they create an account with yet another BNPL? They might, but at some point the effort involved in managing so many accounts may outweigh the benefit that a particular BNPL could offer. It’s also possible that too many BNPLs could confuse the customer in the checkout process - who wants to choose from 10+ payment options? 

No one wants to have to choose which BNPL to love. Should we have to? Couldn’t the companies we know and love better?

Breaking the growth barrier with autofill technology

As it turns out, BNPL’s can do better. And the way they can do better is essentially by doing what they do best already - using innovative technology to solve their customer’s problems.

Using technology like intelligent autofill (created by Fillr). BNPLs would in fact be able to solve their competition and integration issues and in doing so, create an even better byproduct of giving their consumers instant checkout.

To create lasting value for their retailers, BNPLs need to help with a bugbear that continually plagues the ecommerce industry: mobile conversion. Globally, the statistics on this are woeful: the average mobile cart abandonment is over 86%, leading to an average conversion rate on mobile of just 1.55%. Customers simply find it too hard to checkout on a mobile - 27% of cart abandonments occur due to time restraints, and a further 23% occur as the checkout process is too complex

With intelligent autofill though, retailers have, for the very first time, the power to make a real dent in this. Intelligent autofill helps customers check out 37 times faster (with 98% accuracy), meaning that BNPLs could help more customers convert faster, more often, and on an ongoing basis. 

Intelligent autofill combined with dynamic cart scraping can also help solve the BNPL button integration problem. When embedded into a BNPL mobile app or desktop extension, dynamic cart scraping can detect the amount of the cart for which the user in question is wanting to finance. The BNPL can then generate a virtual credit card (VCN) for this amount and with the addition of intelligent autofill, it can then automatically populate any retailers check-out form (including all of the payment fields) with the VCN. 

This means that users can essentially shop anywhere, even if the end retailer doesn’t have that specific BNPL integrated. It’s a double-win for shoppers - they get instant checkout, plus BNPL - everywhere! 

A number of BNPLs are already using this approach, with great success. Since incorporating intelligent autofill into their technology earlier this year, Klarna has seen unsurpassed adoption - they now reach more consumers than ever. Quadpay, who recently signed on, have no reason to expect anything but the same great results. 

Intelligent autofill plus BNPL means the addressable market for any given BNPL is far larger than it would have otherwise been - effectively breaking each company’s growth barrier, even with heightened competition. 

No one wants to have to choose which BNPL to love

In one of Afterpay’s appreciation groups recently, a gushing user commented: 

‘I just love how [with Afterpay], it’s always an add-to-cart kind of day.’ 

With this kind of sentiment, it’s clear that our love for BNPLs isn’t going anywhere. But what we do know is that to sustain their growth, something has to change. So let’s hope that BNPLs integrate Fillr’s Cart Scraping and Autofill tech so none of us has to choose who to love - and the serviceable market for each company can grow exponentially.

Fillr has developed ‘Autofill as a Service’, the world’s most intelligent and accurate autofill that seamlessly integrates into buy-now, pay-later apps. Fillr is already working with Klarna and Quadpay, and is actively welcoming new partnerships. 

Contact us to find out how our technology can help your customers to transact faster and more effectively across millions of merchants sites, boosting your conversions and revenue.