BNPL Cross Border Payments Opportunity
(28 June 2022 – Global) The majority of buy now pay later (BNPL) offerings do not offer cross border payments and while the opportunity to support them is clear, myriad challenges stand in their way.
Most BNPL customers cannot use their products unless they have a bank account in the country they are based and there is limited currency conversion capability. International transactions are a rapidly expanding area in eCommerce and this has only been turbo charged by behavioural changes brought about by COVID.
Shopify’s Black Friday sales data revealed 15 percent of purchases were cross border in 2021, up from 14 percent in 2020. The most popular markets required a currency conversion, specifically US to Canada, Canada to US and UK to US.
“There are good reasons why many companies opt not to touch the space. It complicates the already potentially fraught risk profile of BNPL. KYC and credit checks also come with greater complexity” commented FXC Intelligence CEO, Daniel Webber for Forbes.
“There is also the issue of local norms and expectations. Any payment company operating internationally needs to be aware of different local payment methods, but with BNPL companies also need to be mindful of differences in expectations around checkout experiences and trust.”
“Despite the challenges of cross-border BNPL, it does represent a vital means of competing in a market that is becoming increasingly crowded. Larger players with a strong international presence already offer the service, and if it provides merchants with additional sales, it is going to present a strong additional case for smaller players looking to punch above their weight” Webber added.