BNPL

Over the last 10-15 years, more and more financing options have become available as it has become easier to assess people's credit in less time and online.

Previously, you typically had to be credit approved by your bank and get an overdraft, but today much of this can be done online, as various systems can talk to RKI, SKAT and online banks. Therefore, it is now possible to get both loans and credit in just a few minutes.

In the wake of these opportunities, BNPL has emerged. BNPL stands for "Buy Now Pay Later". In principle, that's all there is to it.

BNPL typically involves three parties.

• A consumer (borrower)
• A webshop
• A 3rd party (lender) who finances the purchase

Let's take an example. Jørgen is our consumer. He wants to buy a TV online for 3495,-. He finds a webshop and places the order. Instead of paying by credit card or mobile payment, as is the case in most transactions, he pays with a BNPL solution. This is where our 3rd party comes in.

The 3rd party company, which is the lender, approves the consumer's credit and gives the 3495,- to our webshop. The webshop has the money and now sends the TV to Jørgen.

The lender then takes care of getting the money from our consumer Jørgen.

This is typically done over several installments depending on the size of the loan.

So where does the lender make its money?

In the BNPL business, the lender must of course also make money. There are different business models. One of these is that the merchant gives a percentage of the order to the lender to provide credit.

Another model is that the merchant gets the full amount, but the borrower (our consumer) is charged interest.

A third model is that neither the borrower nor the webshop is charged interest, but the lender makes money on reminder fees. In other words, when a consumer does not meet their payment deadline.

In Denmark, there is legislation that prescribes how much interest a lender can charge the borrower.

The largest BNPLs in Denmark

In Denmark, there are two major BNPL operators. They are Anyday and ViaBill respectively. Anyday operates with the webshop paying a percentage of the sale and the customer borrows the money interest-free. ViaBill has reversed this so that the customer pays interest and the webshop gets the full amount.

Why is BNPL popular?

BNPL has become popular because webshops have the opportunity to increase their AOV (average order value). People simply buy more than they can afford.

We know online marketing in Shoporama

We've been working with online marketing ourselves for decades. As the only shop system in the country, we have spoken multiple times at conferences such as Marketingcamp, SEOday, Shopcamp, Digital Marketing, E-commerce Manager, Ecommerce Day, Web Analytics Wednesday and many more.