Competition in the buy now, pay later (BNPL) space has intensified over the last few years as established players compete with new entrants vying for a piece of the growing pie.
And in Europe, where customers are quite conservative when it comes to credit, focusing on smaller basket sizes can be the differentiating factor behind getting ahead of local and regional competitors that are mainly focused on bigger purchases.
“Most retailers in Italy, France and Spain were quite skeptical and thought their customers wouldn’t need [BNPL] for 30 to 50 euros worth of products, but we were able to prove that it was quite useful. And once they activated Scalapay, they saw 10-20% of customers adopting it straightaway,” Simone Mancini, CEO at Milan-based BNPL firm Scalapay, told PYMNTS in an interview.
Read more: European BNPL Provider Scalapay Raises Nearly $500M
And keeping to that strategy seems to have served them well. The Italian unicorn firm, which also has operations in France, Spain, Portugal, and Germany, has raised close to $730 million in just two years of launch, part of which was secured from Italy’s postal service Poste Italiane, the country’s largest service infrastructure network, providing financial, payments and digital services to households, businesses and public administrations.
Read also: Italy’s BNPL Unicorn Scalapay Secures $27M From Poste Italiane
Overall, he said they have refrained from adopting a super app strategy like some of the large BNPL players have done, since it isolates merchants who need help navigating the world of online marketplaces.
“Philosophically, in terms of some of the bigger players, we differ in that we don’t want to disintermediate the merchant. We’re not out there to build a super app or to develop our own marketplace. We’re genuinely interested in trying to help merchants, [and] there’s a lot of opportunity to improve that,” he noted.
Building a Sustainable Lifestyle
To further lighten the impact of transactions on customers’ monthly budget, Scalapay has partnered with U.K.-based new generation FinTech Twig to allow customers to resell fashion and electronic products they have previously purchased via Scalapay and get paid instantly by Twig.
Related news: BNPL Platform Scalapay Teams With FinTech Twig on Sustainable Shopping
“All of a sudden, you’ve got people purchasing a bag or a dress and then instantly selling that at a fixed price determined by Twig using an algorithm — that is exciting,” he remarked.
For the Gen Z and millennial consumers that Twig targets, making a purchase with the guarantee that they will be able to resell that instantly at any point in time makes the purchase experience even more “pleasurable,” he said, and allows them to focus on building a sustainable lifestyle, which is a growing trend in the region among that customer group.
Given that the penetration of BNPL remains quite low in southern Europe, Mancini said there’s a lot of untapped opportunities in the various markets where they operate. Against that backdrop, the firm has recently launched travel as a vertical and is planning to expand its in-store QR code payment feature with cards.
Earlier this year, the EU-focused company also launched Magic, a checkout solution to help European merchants transform their entire checkout experience, a move he said is part of their core strategy to “empower merchants and help them deliver amazing, [frictionless] customer experiences.”
No Obligation to Sell, for Now
As more and more consumers embrace the opportunity to pay for retail purchases in several installments, a consolidation trend has overtaken the BNPL space, with Australia’s Zip recently acquiring U.S. lender Sezzle in a deal valued at $352 million.
Related: Sezzle, Zip Deal Shows BNPL’s Consolidation Trend May Continue in 2022
Mancini confirmed to PYMNTS that they have been approached by all the major European BNPL players with proposals, especially given the attractiveness of European markets, which are home to some of the biggest brands in fashion and cosmetics in the world.
But being at a very early stage in the adoption curve means that there are a lot of untapped opportunities in the BNPL space, and Scalapay will be looking to explore them on its own, at least for now.
“I think checkout and the future of eCommerce is very exciting, and being able to raise a lot of funding as we have puts us in a very privileged position where we can continue executing on our vision for years to come. So, there’s no obligation for us to sell in the short term,” Mancini said.
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