Buying on credit, hire-purchase, rent-to-own – over the years the idea of paying a product off with instalment payments has taken many iterations. The latest of these is known as buy now pay later (BNPL) and the market is growing fast.
Unlike traditional credit, BNPL solutions offer the ability to pay a product off in fewer instalments without the burden of interest or fees. Of course this may differ from offer to offer, but generally this is how the market has fallen in-line.
Among these providers is Payflex and its chief executive officer, Paul Behrmann (pictured above) says there is increasing interest for the solution in South Africa.
“South Africans have shown an incredible appetite for Payflex and other BNPL offerings. It is simple to understand, transparent and easy to use – and this is reflected in our triple growth metrics each year since 2019,” says Behrmann.
The market is growing aggressively with Behrmann stating that by the end of 2022, BNPL payments will reach the R2 billion mark.
“BNPL currently makes up 2-3% of total online retail spend and at its current growth rate, this could reach 10-15% in the next two years. We expect to see other channels such as in-store retail driving strong growth as the online market matures,” the CEO adds.
Payflex says its average customer is 25 – 35 years old, young and financially literate. What is curious is the average spend which is around R1 200 according to Payflex. Anyway you slice it, that’s a low amount to be paying off over a few months.
We have to say that considering that rather low amount, we’re curious to see if Behrmann’s predictions come to pass. Not only is there currently a recession in play, but unemployment remains a gargantuan problem in South Africa.
Of course, we’re yet to hit the big shopping season that Black Friday kicks off at the end of November.
With that having been said, despite there being a fee associated with implementing BNPL functionality to your store, it might be a good consideration ahead of the aforementioned shopping season.
