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Thread on my research on "Buy Now Pay Later" #BNPL companies.
Affirm $AFRM, Klarna, Afterpay $AFTPY, Hoolah, Split It, Quadpay, Paypal CreditBill Me later $PYPL, Marcus Pay $GS, Future Pay, Sezzle, Uplift, Open Pay, Zip Pay, Flexi Group, Go CardLess, Fondy, Clear Pay, Lay Buy
Affirm $AFRM, Klarna, Afterpay $AFTPY, Hoolah, Split It, Quadpay, Paypal CreditBill Me later $PYPL, Marcus Pay $GS, Future Pay, Sezzle, Uplift, Open Pay, Zip Pay, Flexi Group, Go CardLess, Fondy, Clear Pay, Lay Buy
BNPL: Buy Now, Pay Later companies enable consumers to defer payments on purchases through installment-based loans. In 2020, it is a $24 Billion market 
https://uniquebusinessmodels.substack.com/p/26-how-do-buy-now-pay-later-bnpl
https://uniquebusinessmodels.substack.com/p/26-how-do-buy-now-pay-later-bnpl
BNPL is gaining traction in the U.S especially among credit card holders, millennials and Gen Z consumers. 18% of millennials made at least one BNPL purchase within the last two years. https://www.fool.com/the-ascent/research/buy-now-pay-later-statistics/
BNPL: Nowadays, consumers are more budget conscious and increasingly seek out BNPL providers to finance single purchases to avoid revolving credit card debt.
BNPL: Just 7% of Americans made a BNPL purchase through the first nine months of 2020âthe same percentage that used the service in 2019.
Although 7% of consumers seems like a small number, users make an average of $1400 purchase mostly electronics.
Although 7% of consumers seems like a small number, users make an average of $1400 purchase mostly electronics.
BNPLâs value will reach over 12% of total eCommerce spend on physical goods by 2025 
, according to Kaleidoâs new report on Digital BNPL & ePOS Financing: Market Outlook 2020
, according to Kaleidoâs new report on Digital BNPL & ePOS Financing: Market Outlook 2020
Whoâs making BNPL purchases?
High-income consumers. 70% earn > $75K a year. Theyâre highly educated
Credit cardholders. 97% of them have at least one credit card.
Millennials.18% made at least one BNPL purchase over the past two years,
High-income consumers. 70% earn > $75K a year. Theyâre highly educated
Credit cardholders. 97% of them have at least one credit card.
Millennials.18% made at least one BNPL purchase over the past two years,
Why use BPNL?
The three most-frequently cited reasons for using BNPL according to a study from The Ascent is to:
1) Avoid paying credit card interest;
2) Make purchases that otherwise wouldn't fit in my budget;
3) Borrow money without a credit check. https://www.fintechtris.com/blog/buy-now-pay-later-fintech
The three most-frequently cited reasons for using BNPL according to a study from The Ascent is to:
1) Avoid paying credit card interest;
2) Make purchases that otherwise wouldn't fit in my budget;
3) Borrow money without a credit check. https://www.fintechtris.com/blog/buy-now-pay-later-fintech
BNPL: The "Big 4" companies are : $PYPL acquired Bill me later - 2008), Klarna, $AFRM and $AFTPY (Australia). There are 30-50 other cos. https://www.pymnts.com/buy-now-pay-later/2021/bnpl-company-affirm-completes-264-million-paybright-deal/
As you can see below, $PYPL, Klarna, Afterpay $AFTPY and $AFRM have the highest # of "merchants" and "consumers.
PayPal Credit has far more users than its competitors-2008 acquisition of Bill Me Later, has been in the game far longer than anyone else.
1)Itâs not a winner-take-all game.
2)BNPL providers will need to sharpen their sales attribution stories.
3)BNPL providers will specialize
1)Itâs not a winner-take-all game.
2)BNPL providers will need to sharpen their sales attribution stories.
3)BNPL providers will specialize
Who are the Losers in BNPL?
The banks and payment networks.
Merchants have two things in common: 1) Theyâll do anything to make a sale, and 2) They hate (with a passion) interchange fees
"Micro loans at the point of sale" https://www.huffpost.com/entry/buy-now-pay-later-popular-pandemic-safe_l_5f3d4fa2c5b6d8a917411568
The banks and payment networks.
Merchants have two things in common: 1) Theyâll do anything to make a sale, and 2) They hate (with a passion) interchange fees
"Micro loans at the point of sale" https://www.huffpost.com/entry/buy-now-pay-later-popular-pandemic-safe_l_5f3d4fa2c5b6d8a917411568
Besides $PYPL the big 3 are going after different segments of customers.
https://blog.thesharmas.org/2020/10/31/bnpl-affirm-klarna-afterpay-gtm/
https://blog.thesharmas.org/2020/10/31/bnpl-affirm-klarna-afterpay-gtm/
Benefits for Customers
Take home the product even if you don't have enough money to purchase it at that moment
Smaller, manageable repayments
Simple sign-up and almost instant assessment (much simpler and quicker than getting a credit card)
https://tearsheet.co/online-lenders/what-affirms-ipo-and-chases-new-installment-product-say-about-the-bnpl-market/
Take home the product even if you don't have enough money to purchase it at that moment
Smaller, manageable repayments
Simple sign-up and almost instant assessment (much simpler and quicker than getting a credit card)
https://tearsheet.co/online-lenders/what-affirms-ipo-and-chases-new-installment-product-say-about-the-bnpl-market/
Benefits for Merchants
Increased conversion
Increased average transaction value
Comparatively easy integration
No Chargeback risk
How do BNPL Companies make money?
From Sellers
Merchants usually pay a BNPL charge ranging from 2 to 8 percent of the purchase amount
Increased conversion
Increased average transaction value
Comparatively easy integration
No Chargeback risk
How do BNPL Companies make money?
From Sellers
Merchants usually pay a BNPL charge ranging from 2 to 8 percent of the purchase amount
Most third-party BNPL providers do a soft credit check to avoid giving money to people who have shown general disregard for repaying obligations, but this isnât universal. https://www.businesswire.com/news/home/20200922005066/en/Buy-Now-Pay-Later-Digital-Spend-Led-by-Klarna-PayPal-Afterpay-to-Double-by-2025-Reaching-680-Billion---Kaleido-Intelligence
The big 3 are still growing at over 80% annually and expect to next year as well. Covid increased their growth rates to over 100%
One other company in the space is Katapult, coming public via a SPAC, $FSRV - they focus on the higher risk customers - who have more credit risk https://katapult.com/
@HaydenCapital has a great presentation on $AFTPY - Afterpay. The stock has been on a tear in 2020.
http://www.haydencapital.com/wp-content/uploads/Hayden-Captal_APT-Presentation.pdf
http://www.haydencapital.com/wp-content/uploads/Hayden-Captal_APT-Presentation.pdf
Mukund's analysis: I like the space as a subset of #FinTech. I already own $PYPL. I might buy a very small position in $AFRM if the Market Cap is < $15B, which is unlikely since they are going public at $33 - $38 expecting $9B valuation, but likely to end up at $50
$AFRM - alternative data to check merchant acquisition
$AFTPY and $PYPL data as well available
https://trends.builtwith.com/payment/Affirm
https://trends.builtwith.com/payment/Klarna
https://trends.builtwith.com/payment/Afterpay
$AFTPY and $PYPL data as well available
https://trends.builtwith.com/payment/Affirm
https://trends.builtwith.com/payment/Klarna
https://trends.builtwith.com/payment/Afterpay
I will add some words of caution, but I am a "risk averse" investor, so take my caution with a grain or bushel of salt.
The valuations on these are RICH
I cant see myself holding $AFRM but I am also paying rich valuations for many other "growth stocks"
The valuations on these are RICH
I cant see myself holding $AFRM but I am also paying rich valuations for many other "growth stocks"
