‘Buy now, pay later’ option

Consumers in Greece can now make their purchases through e-commerce or at brick-and-mortar stores without the use of a card or by taking out a consumer loan, thanks to the “buy now, pay later” (BNPL) service introduced by financial technology (fintech) companies such as Finloup.

The innovation of that service is in the use of open banking for the assessment of each consumer at the moment they perform a purchase (online or not), thereby securing an immediate approval of the transaction without delay. This way the firms offering the BNPL service use advanced fintech and the open banking system through cooperation with payment institutions in order to assess a user and the risk involved, drawing data at the moment of the transaction.

Companies involved in this service say the process is particularly simple and secure, and its main advantage is that consumers do not even need to have a credit history. In the case of credit via BNPL, the user shares his bank data with the company via the open banking system, and upon approval may take the option of interest-free tranches – typically up to four – with the process completed via his credit card.

That method allows companies to increase their sales, granting them an extra instrument facilitating customer payments. The cost for tradesmen is assessed as a share of the turnover from the BNPL process and based on the deal each one of them has made with the service provider.

Data show that BNPL has evolved into a global trend in payments and US surveys show that the number of consumers using it has been growing by 300% on an annual basis since 2018.

Greek banks have long offered payment-in-tranches services in a fairly innovative form, but the high debts run up on credit cards have resulted in a drop in the number of such cards in the market. BNPL service providers are now rushing to plug that gap, offering credit to a number of consumer categories, such as younger generations that are the most active category in online purchases.