As more people were forced to shop online due to the COVID-19 pandemic, buy now, pay later (BNPL) became extremely popular, and customers have continued to find value in the product. According to Adobe Analytics, BNPL loans accounted for USD 75 billion in online spending in 2023, an increase of 14.3% from 2022.

Apple stated that its new system “will allow us to work with banks and lenders that support Apple Pay to bring flexible payments to more users, in more places across the globe.”

The company stopped talking about why it was discontinuing its independent BNPL offering. The Wallet app will continue to allow current BNPL customers to manage and pay for open loans, according to the company.

The Apple Pay Later service is used to allow its users to take out loans and split purchases into four instalments without paying interest or fees. As the product is witnessing a reboot, the company has confirmed that the existing users with “Pay Later Loans” will be able to track them within the Wallet app, but no new loans will be issued.

Apple Pay users will have access to new instalment loan options this fall, including the option to apply for BNPL loans directly through Affirm when they check out with Apple Pay, the company announced. The tech giant also announced that customers would also be able to access instalments from credit and debit cards.

Analysts had considered Affirm and other BNPL providers to be competitors of Apple’s initial BNPL product. It gave clients the option to purchase goods up to USD 1,000 and pay for them in four interest-free payments.

Customers can choose between paying for goods in two or four instalments with Affirm, or they can choose to pay for more expensive items in monthly instalments.

“To me, this sounds a lot like what we see happening with debit cards. Regardless of which debit card a consumer has funded their purchases, as long as they use Apple Pay, it’s Apple that owns the experience,” Sean Gelles, director of payments intelligence at JD Power, said.

Gelles went on to say that there would be “minimal risk for Apple as they will thereby retain the relationship with the customer” if Apple Pay was used to deliver its new line of BNPL products.

All You Need to Know About Pay Later Service

Apple first announced the launch of this new service with the iOS 16 update in 2022, and the tech giant began rolling out the feature via ‘early access’ in March 2023. However, the feature was not officially launched and made part of the Wallet app until October 2023.

Launched in partnership with Mastercard and Goldman Sachs, the Pay Later service was the first occasion of Apple offering short-term loans on its own. With the service coming to an end in 2024, Apple will switch to a built-in instalment loan feature, which will be added with the iOS 18 update.

As announced by the venture in the recently concluded WWDC 2024, the instalment loan feature would first be rolled out to the United Kingdom users, with support for HSBC and Monzo banks.

Apple told the media, “Starting later this year (2024), users across the globe will be able to access instalment loans offered through credit and debit cards, as well as lenders, when checking out with Apple Pay. With the introduction of this new global instalment loan offering, we will no longer offer Apple Pay Later in the US.”

“Our focus continues to be on providing our users with access to easy, secure and private payment options with Apple Pay, and this solution will enable us to bring flexible payments to more users, in more places across the globe, in collaboration with Apple Pay enabled banks and lenders.” the tech giant concluded.

The post Apple kills its ‘Pay Later’ service, turns to third parties for BNPL products appeared first on International Finance.

However, amidst the urgent need for financial support, the importance of responsible embedded lending cannot be overstated. Unchecked lending and unregulated BNPL services can end up hurting consumers rather than helping. A recent Bloomberg survey found that 43% of those who owe money to BNPL services said they were behind on payments.

Financial institutions that provide embedded lending solutions while promoting responsible financing usage can give customers a safe alternative.

A lifeline: Embedded Lending

The UK credit card average purchase APR rose to 34.7% in February—up 4.1% from 12 months ago. Overusing credit cards could cost consumers substantially more since only 48% of customers pay off their balance in full, accruing additional interest.

Such untimely payments and loan defaults, in addition to inflating the cost of living, can lead to ‘bad’ or low credit scores, leaving those in need without future access to credit cards.

Embedded lending options, including lines of credit, split pay, and instalment loans, from a regulated bank or lender provide an affordable credit option with as low as 0% interest. Due to its accessibility and multi-lender capabilities, embedded lending offers a solution for a range of credit profiles, ticket sizes and product types.

The importance of responsible use

Since BNPL options require a more general review of a person’s eligibility rather than a rigorous approval process, providers and merchants must be cautious to protect consumers from putting themselves at financial risk. Without the proper parameters, shoppers could take out multiple loans simultaneously, leading to a risk of overborrowing and falling into debt.

Financial institutions and merchants offering point-of-sale (POS) financing should discourage customers from spending more than they can afford by educating them on how to use financing responsibly and by matching the right loan or credit option to the right credit profile, product and ticket size.

It’s also important to offer POS financing in the right context. For example, using POS financing to pay for essentials like groceries and gas isn’t the most responsible use case for consumers, as it increases the risk of unmanageable, untraceable debt. The more responsible approach is to offer financing for larger purchases that add value to the customer’s life, such as household appliances, home improvement projects, medical procedures and so on.

A solution: White-label bank Embedded Lending

With the rise in fintechs, there are a larger number of non-financial platforms offering third-party lending.

As Aaron Byrne, Financial Services (FS) Leader at EY-Parthenon, puts it: The “blurred line between financial services and non-financial platforms might make it harder for consumers to differentiate or choose between legitimate services and potentially predatory ones.”

Banks can combat this by offering seamless loan options directly within the customer buying journey—whether online, in-store, or telephonically—ensuring responsible financing with the loan amount and terms tailored to the customer’s credit profile, product type, and ticket size.

As trusted, experienced underwriters and lenders, banks are uniquely positioned to offer responsible loan products with the most competitive rates to consumers and business buyers.

Banks are used to operating within regulated frameworks and providing transparent information to customers, including interest rates, repayment terms and potential late fees. Furthermore, these regulated institutions both report and bank on other regulated lenders reporting a consumer’s credit usage in order to determine eligibility (and in turn, responsibility); something that is currently lacking with non-regulated BNPL solutions.

It’s clear that embedded lending is enabling consumers and businesses to better manage their cash flow and pay for needed purchases. However, responsible use is crucial. Banks are able to position themselves as the safest and most trustworthy partners in the embedded lending landscape.

The post Embedded Lending: Lifeline or debt trap? appeared first on International Finance.

The venture, established in 2020, provides instalment solution for businesses covering both business-to-business (B2B) and business-to-consumer (B2C) transactions with its state-of-the-art platform.

“Our holistic solution caters for both online and offline payments through a wide variety of payment channels (omni-channel). With our collective experience of over 20 years serving in the financial services industry, du-it is on a mission to offer a smarter way of living by catering to the unique needs of every individual to achieve financial convenience,” the venture stated further.

Knowing Things In Detail

Du-it first hit the headlines in December 2022, as it got investments from a fund named TIM Ventures, which was set up in the same year to invest in emerging start-ups in the insurtech and Islamic Fintech space in Malaysia.

The RM45 million venture capital fund has been set up by Hong Kong-based insurance company FWD Group and Malaysia-based firm Artem Ventures.

Du-It, along with four other start-ups, Senang, Pewarisan and Blueduck, got the funding through the VC fund. Now talking about Malaysia’s Buy Now Pay Later (BNPL) industry, current trends indicate a robust growth trajectory, as the sector is projected to achieve a gross merchandise value of USD 2.78 billion in coming months, thereby representing a striking annual growth of 17.5%. By 2029, the BNPL market is expected to further expand to USD 4.76 billion.

The sustained growth comes amidst a surge in e-commerce activities throughout the country, leveraging an increasing consumer preference for flexible financing solutions. The BNPL payment platforms, on the other hand, have proven to be particularly popular, offering convenient short-term loans that complement the modern consumer lifestyle.

The surge is also underpinned by key performance indicators revealing an uptick in transaction volume and average value per transaction, pointing to BNPL’s growing adoption for a variety of purchases—from routine retail shopping to sectors such as home improvement and travel.

Du-it is looking to transform this thriving sector completely through its two solutions: “du-it BIZ” and “du-it B2C.” We will talk about these solutions in detail.

Instalment Solutions For Businesses

“Du-it BIZ” is all about allowing business purchases to be paid in interest free instalments. The solution allows B2B manufacturers and wholesalers to get paid upfront, while their business customers can pay in interest-free instalment with pre-approved credit limit.

The operational backbone of “du-it BIZ” is a “Digital B2B BNPL Platform,” which provides a seamless end-to-end digital experience for businesses which is secure and easy to adopt. The solution also Caters for both online and offline payments through a wide variety of web and mobile payment channels. Most importantly, “du-it BIZ” is one of the first Shariah-Compliant B2B BNPL covering a wide range of industries.

Partnering through “du-it BIZ” also helps businesses to increase customer loyalty and sales conversions, by providing payment flexibility for the customers. The businesses can make a sale and get paid upfront without having to worry about credit risk. Another benefit of opting “du-it BIZ” is the solution’s seamless API integration, which covers a wide variety of web and mobile commerce channels all at no cost.

By offering white-label BNPL solution under the “du-it BIZ,” businesses can give their customers the freedom to divide their payments into four equal interest-free instalments, which, in turn, will increase the Sales conversion rate at the point of checkout and avoid high fall-off rate. Also, the interest-free instalment payment option will promote quicker and more consistent sales among the established consumer base, apart from cultivating strong customer loyalty.

Benefits For Customers Too

Using “du-it B2C,” customers can pay and transact in a secure environment with du-it’s state-of-the-art technology without any worries, apart from having the freedom of using the start-up’s platform both online and in-store (offline).

In an “In-Store” environment, customers can pay using du-it at checkout by scanning the QR Code. In the “Split Payment” mode, the customers can choose to pay between four equal monthly instalments with no interest. When it comes to using “du-it B2C” online, the customers get the added benefit of tracking their expenditure history via the “du-it B2C” app.

“Du-it allows you to shop stress-free with no hidden costs. Split your purchase over four equal payments with no interest. Pay only 25% and get what you love, right away. We make shopping fun. It’s your choice,” the start-up commented further.

The Way Ahead

With a robust growth forecast and expanding consumer adoption, Malaysia’s BNPL industry will redefine retail and consumer financing. The BNPL movement in the Southeast Asian country is signifying a pivotal shift in consumer finance, catalysing new opportunities in the digital economy in the process.

By embracing innovation and adapting to consumer needs, BNPL in Malaysia is charting a course towards a dynamic and promising future. Expect du-it to take a leading role in this journey.

The post Start-up of the Week: The ‘du-it’ revolution in Malaysia’s BNPL scene appeared first on International Finance.

While the company has declined to reveal its current valuation, but the CEO and founder Adalberto Flores told the media that he expects it will soon achieve the $100 million+ ARR milestone. He also added, saying that the company’s goal is to connect the whole Mexican retail economy without requiring consumers to have a bank account, a credit card, or a credit history.

Keuski provides services like personal loans, salary advances and BNPL services. Till now, the company has processed more than 5 million transactions online since it was founded in 2012. Some of the companies that rely on the BNPL services provided by Kueski are Walmart, Nautica, Motorola and Xiaomi Shop.

At present, Mexico has the fifth-highest rate of unbanked citizens globally, and nearly 90 percent of retail transactions are made with cash. As instalment plans are increasing in popularity, around the world, the Kueski Pay BNPL product has grown almost 210 times year-over-year growth in Gross Merchandise Volume in the last 12 months.

Recently, the firm has also rolled out its BNPL product in bricks-and-mortar stores and is set to launch a mobile application that will enable its users to verify their profile, manage payments, and browse partner stores.

The post Mexican BNPL platform Keuski raises $202 mn to expand its business appeared first on International Finance.

Recently, Standard Chartered has made strides in the BNPL segment in Asia. In this regard, Jeffrey Tan, Head of Consumer, Private and Business Banking (CPBB), Indonesia, Standard Chartered, told the media, “While Standard Chartered already enjoys a strong position in the retail affluent segment, we are strengthening and expanding our distribution channels to serve mass-market customers more efficiently.

“We are thus delighted to partner with Kredivo, which shares our desire to increase financial inclusion in Indonesia, to offer point-of-sale financing via digital platforms.”

Earlier this month, it was reported that the UK-based lending giant has invested $500 million in Atome Financial as a part of the lender’s ten-year multi-product strategic partnership that will entail the rollout of BNPL services in Asian markets.

Judy Hsu, chief executive, consumer, private and business banking, Standard Chartered Bank said that the partnership with Atome Financial gives the lender the opportunity to be part of the rapidly growing digital consumer finance ecosystem.

“Our deep knowledge of Asia’s markets coupled with Atome Financial’s experience in digital consumer finance will allow us to reach even more customers and drive greater financial participation of those underserved and underbanked,” Judy added.

The post Standard Chartered and Kredivo join hands to offer BNPL loans in Indonesia appeared first on International Finance.

After the acquisition, the Japan-based company will continue to operate its existing business and maintain the brand and Paidy’s president and CEO Riku Sugie and founder and executive chairman Russell Cummer will retain their positions in the company.

Paidy aids Japanese shoppers to make purchases online, and then pay for them each month in a consolidated bill at a convenience store or via bank transfer. It uses proprietary technology to score creditworthiness, underwrite transactions and guarantee payment to merchants.

Paidy was launched in 2014 and at present, the firm has close to six million registered users. In April this year, the company raised $120 million in a Series D funding round. Japan is considered to be the third-largest e-commerce market in the world and this move by PayPal is significantly important to gain more market share both in the country and the region, specifically in the area of providing deferred payment services as an alternative to credit cards.

Peter Kevan, VP, head of Japan, PayPal, told the media, “Combining Paidy’s brand, capabilities and talented team with PayPal’s expertise, resources and global scale will create a strong foundation to accelerate our momentum in this strategically important market.”

The post PayPal agrees to buy Japanese BNPL firm Paidy for $2.7 bn appeared first on International Finance.