With buy now, pay later (BNPL) is emerging as a popular alternative method of payment over the last couple of years, fintech companies are capturing this space with various innovative product launches. They are using the non-conventional data points to extend their credit options to people who otherwise would not have accessed them, re-assuring their growth in the digital market.
In 2020, the use of BNPL products increased significantly in the United Kingdom. According to PayNXT360, the BNPL market in the United Kingdom recorded an annual growth of 61.1% in 2020. Looking at the lucrative market opportunity, fintech companies are expanding their lending product portfolio with new products such as virtual BNPL cards.
In November 2021, Monzo, one of the leading digital banks in the United Kingdom introduced a virtual BNPL card for customers who want to access contactless payments using their Monzo Flex BNPL option. In September 2021, the company launched Monzo Flex, a BNPL product that offers the customer a credit limit of GBP 3,000 and can repay the interest-free loan over three months.
The digital bank has now extended the option of choosing virtual contactless cards for in-store payments such as Apple Pay or Google Pay payments for its Flex customers. Customers who want to benefit from the option must enter their card details at checkout and then proceed to pay their first installment from the previously chosen installment plan.
BNPL players like Klarna and Laybuy have already tapped the virtual BNPL card market. Now, this market is forayed by neo banks too. It is important to mention that another digital bank from the United Kingdom, Curve, also rolled out its BNPL virtual card on the same day with Monzo. Consequently, PayNXT360 expects the fintech companies based in the United Kingdom are in cut-throat competition with one another. These companies are targeting niche areas and innovative product launches to strengthen their position in the market.
