By Chisom Nwatu
BNPL (Buy Now Pay Later), a fintech solution that allows consumers to buy an item they want now without being required to pay instantly, is gaining wide acceptance in Nigeria with more tech firms as well as consumers keying into the trend.
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Whereas BNPL has been around for some time, more popularity and recognition came its way in the wake of the Covid-19 pandemic which accelerated the growth of online shopping, thus paving way for more fintech and technology firms to participate, amongst others.
In Nigeria, with the rise of e-commerce, many companies have embraced the BNPL opportunity by offering it under different terms and conditions. While some will allow the customer to buy only when they make an advance payment, others just need the buyer to do some documentation afterwards and pay over period of time.
Currently, the leading BNPL service providers are Affirm, Klarna, Afterpay, and Paypal. Some offer other fintech services as well but have managed to gain huge popularity in the BNPL sector.
According to Statista, as of June 2021, Affirm has around 7m active users worldwide, Afterpay has 16m, whereas Klarna has more than 90m, which highlights the popularity of BNPL amidst the global pandemic.
Although the recent 2022 report from yStats.com. shows Klarna and Afterpay as the two biggest BNPL companies, with millions of users, both companies work with tens of thousands of retailers and are responsible for millions of transactions.
BNPL trends in 2021-2022
Millions of shoppers now use BNPL service providers to purchase anything they desire instantly, which explains the rise in providers with even big companies deciding to offer BNPL services.
Companies such as PayPal, Square, Monzo, Revolut, Amazon, Walmart, and Mastercard are all offering BNPL options at checkout. In fact, BNPL transactions have significantly increased during the COVID-19 pandemic with consumers finding it harder to access credit and with declining incomes.
BNPL recorded a 215 percent year-over-year growth in the first two months of 2021, according to Adobe. Nearly 75 percent of BNPL users are Generation Z or millennial as they seem to be more cautious about credit in the aftermath of the financial crisis eMarketer.
According to a survey conducted by the Mercator Advisory Group in the first half of 2021, around 52 percent of customers aged 18-24 had used BNPL solutions in the previous 12 months. Roughly 1.5 billion consumers will spend $995 billion through BNPL by 2026.
However, the risks and disadvantages of BNPL have been massively talked about as well. Economists and experts worry that the principle of buying without having the money to pay would eventually worsen credit access and lead to severe defaults.
Nonetheless, this innovation has been wildly accepted by both merchants and customers. In the upcoming years, it is worth looking into changes in the regulatory systems.
BNPL platforms in Nigeria
With the advent of BNPL in Nigeria, so many scammers are also taking advantage of the programme to defraud their victims. Hence, one needs to be careful and do a thorough research to ensure the company is legit.
Amongst the legit platforms offering BNPL services in Nigeria are PayQart, Credpal, Paywithspecta, EasyBuy, PayFlexi, Carbon Zero, Afterpay, and Verdict.
PayQart allows its users to pay for goods and services in instalment. It has a flexible repayment option. Once a customer is approved as a shopper, that customer can decide to opt in for repayment every week or monthly over a period of two to six months.
PayQart supports both online and in-store stores. Zerofinance, Nexus, Panasonic, Samsung, Reohob, and Techno are some of the BNPL stores supported by PayQart.
CredPal is a buy and pay later technology company in Nigeria that allows businesses and shoppers to buy anything across online and offline stores by providing them with instant access to credit at the point of checkout.
With Credpal, one can enjoy the flexible payment of buying now and paying later in instalment period that can range between two to 12 months depending on the customer’s credit score.
As a shopper, once you meet its loan requirements, Credpal will provide credit that can cover anything you buy. Shoprite, Slot, Jumia Food, Hard Rock Café, Pointek, Bukkahut, Image Stores, Airtel, Cakehub, Adidas, LG, etc. are some of the BNPL stores in Nigeria powered by Credpal.
Paywithspecta is one of the top-notch BNPL companies in Nigeria. Paywithspecta gives its users a digital spending limit that can be used to make purchases from merchants both in-store and online. 30 percent of the spending limit can be accessed as cash to make purchases from merchants yet to sign up for Paywithspecta or for their personal needs.
You are not charged interest and fees when you purchase and choose to repay in one to three instalments. However, you can get charged when you spread your repayments between seven to 12 months for purchases at any supported partner stores.
Paywithspecta powers BNPL stores like Autocheck, JustFones, Slot, Cars45, Jamara Home, JMG Ltd, Elveco Stores, AdvanceCare Medicals, Imperium, Allbase Global Energy, Zoomba Digitals, Shopaz Hub, etc.
Afterpay, is a financial technology company that lets you buy what you want to buy today and pay for it in four equal instalments with free interest. However, a compulsory 25 percent payment will be required before you can take home your purchase item and spread the other 75 percent payment into three equal instalment period.
Afterpay has order and account limits which start low and only increase once you’ve establish a consistent repayment track record.
Shopsfit ng, Makarfi, Wearestallion, Cosmospay, Shopnaijakids, Lagostraffic are some of the BNPL stores in Nigeria powered by Afterpay.
PayFlexi is an all-in-one flexible payment gateway that gives consumers the option to pay in instalment at checkout. It also enables merchants to collect upfront payment from customers.
As a shopper, you can checkout with Payflexi on supported sites but will be required to make at least an initial deposit of 40 percent and spread the other 60 percent over a period of six months.
Payflexi is currently integrated with most payment gateways and eCommerce firms. Oyato.ng, Ojaayo, RegalPlanet, Micserah, TravelNow, Orbitbaby, Z Mart, Smartprintsink are some of the BNPL stores in Nigeria powered by Payflexi.
EasyBuy is an offline payment app that allows businesses and individuals to enjoy the service of buy now pay later in Nigeria over a period that ranges from three to suix months.
To get started with EasyBuy, one will need to pay at least 20 percent-30 percent outright before paying for the rest in instalment. The 70 percent balance of the purchase will be paid from the shopper’s bank account on a monthly basis + interest rates. Thus, once a 30 percent down payment is made through EasyBuy, you can take your device home.
EasyBuy is an app but focuses majorly on offline device financing with most phone stores supporting this platform. Apple, Tecno, Infinix, Itel, Oppo, Gionee, MI, 3CHub are BNPL stores powered by EasyBuy.
MTN and BNPL
MTN, one of Nigeria’s leading telecommunication companies, in attempt to solve the problem of low internet access across Africa, partnered with Intelligra, a pioneering smartphone financing company in Nigeria, to provide its customers access to modern, internet-enabled phones through a flexible buy-now-pay-later scheme.
The buy-now-pay-later scheme enables existing MTN customers to obtain smartphones and pay the cost within six to 12 months. According to MTN, the main purpose of pioneering a telco-led BNPL product in Nigeria goes beyond profit-making.
The goal, the telco said, is to connect more Nigerians to the internet and create a Nigeria where people are not restricted from achieving their dreams due to a lack of internet access.
“The partnership with Intelligra will drive financial inclusion, digital financing devices, and make them accessible to the average man. It would also grant customers access to the internet, entertainment, and education while allowing users to communicate easily,” Adia Sowho, chief marketing officer, MTN Nigeria, said.
Other stakeholders in the multi-party partnership include SLOT, a nationwide mobile phone dealer, Stanbic IBTC Bank, a key financier, VFD Microfinance Bank, and some other retail partners. While the financiers provide the deep pockets needed to scale the mass rollout of the BNPL product, fulfilment partners like SLOT help to complete last-mile delivery for users across the country.
Notably, the BNPL phones are restricted to users of the MTN network (at least one of the sim cards must be MTN). And in the case of a loan default, the phone’s functionality can be remotely disabled. As part of the product offerings, customers are entitled to a one-time screen replacement or a phone replacement in the event of theft.
Africa’s rapidly growing technology space is currently mobile-led. Hence, a solution like this, which puts modern mobile phones into the hands of Nigerians, is a commendable move by MTN.
Meanwhile, MTN and its partners have upheld that they’re not just offering regular buy-now-pay-later phones. According to them, these phones will come with embedded voice and data plans, which qualifies them as wealth-creation tools in the hands of their users.
Tayo Ogundipe, CEO and founder of Intelligra Solutions Ltd, expressed his delight and hope for Nigerians to gain rapid digital inclusion and economic opportunities through the partnership.
“This partnership with MTN, the foremost telecom provider in Africa, and collaborations with financing institutions including Stanbic IBTC, VFD MFB, Personal Trust MFB, Credit Direct Ltd. and others, will help proffer a solution to the low smartphone penetration for Africans and increase digital and financial inclusion,” he said.
He further added that the deal also involves key partners who will offer MTN users across the country a unique, convenient, simple, and flexible variant of BNPL with their choice of premium, quality brands, including Samsung, Nokia, Tecno, Infinix, and iTel models
Future of BNPL
The global BNPL market size is expected to reach USD 20.40 billion by 2028, registering a CAGR of 22.4 percent from 2021 to 2028.
Also, analysts predict that BNPL service providers will adopt steps such as sponsoring shoppers on their own apps (brands are starting to promote some products via sponsored listing formats, and pay only when a shopper engages with the ad). For instance, Afterpay will enable its merchant partners to advertise its app to boost their promotions, products, and offers.
BNPL service will also claim a commission from sales, to see just how much the BNPL providers are boosting their sales. They will specialise in a product category: To make the customer journey as smooth and pleasant as possible.
Lastly, although this has already started, big tech companies will continue adopting BNPL solutions in an attempt to keep up with the current fintech ecosystem.