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The Payments Race: The Rise of Buy Now, Pay Later

We share actionable insights from the VOICES 2020 talk, identifying the consumer mindset driving the adoption of Buy Now, Pay Later solutions and why retailers should look to the fastest-growing online payment method in the US when developing post-pandemic resurgence plans.
Silvija Martincevic, chief commercial officer at Affirm, in conversation with BoF Founder and CEO Imran Amed at VOICES 2020 on The Payments Race: The Rise of Buy Now, Pay Later.
Silvija Martincevic, chief commercial officer at Affirm, in conversation with BoF Founder and CEO Imran Amed at VOICES 2020 on The Payments Race: The Rise of Buy Now, Pay Later. Getty Images for The Business of Fashion.
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On Day 3 of VOICES, delivered via a global broadcast from a pop-up studio in London, Affirm’s Chief Commercial Officer Silvija Martincevic shared her insights on the explosive adoption of Buy Now, Pay Later solutions, and how reimagining payment strategies can drive future growth in the fashion industry, with Imran Amed, founder & CEO of The Business of Fashion.

Buy Now, Pay Later is the fastest-growing online payment method in the US, as well as Australia, Brazil, France, Japan, the Netherlands and the United Kingdom. Affirm was the first to enter the pay-over-time space in the US and remains a category leader with a network of more than 6.2 million customers and 6,500+ retailers.

Below, we share Martincevic’s insights from the talk, identifying the significant shifts in consumer mindset driving the global adoption of Buy Now, Pay Later solutions and why retailers should be crafting post pandemic resurgence plans.

The new consumer mindset: affordability, predictability and transparency

Affirm’s Chief Commercial Officer Silvija Martincevic.

“Buy Now, Pay Later solutions are expected to triple over the next two years. There are three reasons why that is happening: affordability, predictability and transparency. First, regarding affordability — we all have had to adjust to this pandemic, so if you are a looking for an office chair for your home office, for example, Buy Now, Pay Later solutions offer bi-weekly or monthly payments so that purchases that would have been difficult to put on a credit card are affordable because you pay for it over time.

“Secondly, all of us are living in the world of subscription services, whether that is Netflix or Rent the Runway. We are all now used to subscription services as the norm. Buy Now, Pay Later solutions actually provide a similar, predictable monthly payment. So, if you want to purchase a Peloton exercise bike, you can purchase it over 39 months at zero percent interest for less than the cost of a monthly gym membership.

“The third reason is transparency. As the pandemic has created economic uncertainty, customers are really focused on balancing their budgets. With Affirm, which doesn’t charge late fees or deferred interest, you know exactly what you are going to pay. That transparency provides greater control of your budget.”

Omni-channel connectivity should be the foundation of retail’s resurgence plan

“In-store retail is still a $6 trillion business and that is not going to go away. What I would encourage retailers to think about is, what is your resurgence plan? How are you going to ensure you have a seamless solution between online and in-store as the pandemic comes to an end?

“Buy Now, Pay Later solutions can provide the connective tissue for payment flexibility, driving omni-channel trends such as Buy Online, Pick Up In-Store and Buy Online, Return In-Store.”

Touchless payments accelerate m-commerce growth

“M-commerce is a key trend for retailer to act upon, and while mobile and touchless payments are a huge trend outside of the United States, in the past touchless has only been used in about one third of one percent of transactions in the US.

“This is changing though — during Black Friday and Cyber Monday, according to our data, 54 percent of online transactions were completed on a mobile device, and the growth in touchless payments, for mobile commerce, is going to accelerate globally next year, but even more so in the US.”

This is a sponsored feature paid for by Affirm as part of a BoF partnership. This interview has been edited and condensed for clarity.

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