The buy now-pay later segment has experienced accelerated growth as new players like Amazon, Flipkart and BYJU’S enter the space
Simpl, a BNPL platform, innovates the model to act as a conversion tool for its merchant partners
The fintech startup has more than 25 million approved users and more than 5,500 merchant partners
For a few years now, the BNPL (buy now-pay later) segment in fintech has grown steadily, with digital lenders increasingly reaching out to people who do not have access to cards. credit or who are reluctant to use plastic money for a variety of reasons. . Lately, non-fintech players like Amazon, Flipkart, and BYJU, and traditional banks like ICICI Bank and Axis Bank have also entered the space, sensing the opportunity to reach out to a wider audience.
Although credit and debit cards are the most widely used payment methods in the world, people’s interest in alternative digital payment systems has accelerated in a post-Covid world, and India is not. no exception. Major BNPL players in the country include Bengaluru-based Simpl and ZestMoney, Delhi-NCR-based Pine Labs, and Mumbai-based LazyPay.
Companies in this space offer easy access to unsecured loans and charge a low interest rate varying between 0 and 24%. In addition, they offer both high cost financing (25-100,000 INR up to 90 days) and low cost financing (up to 25,000 INR up to 30 days) to meet the varied needs of clients. borrowers looking for unsecured debt.
Much like their global counterparts, most BNPL service users in India fundraise to make month-end purchases to achieve the next salary or use it for its convenience, because with a built-in payment gateway, users don’t do not need to enter a UPI pin or wait for the OTP code after each transaction. What differentiates the BNPL service from a personal loan is that you only reimburse (no longer a small interest in some cases) the money used instead of the entire line of credit.
Essentially, the boom in the industry was sparked by the low penetration of credit cards (amounts to 3%), a lack of short-term institutional loans and predatory interest rates charged by private lenders. The boom in online sales, a lifeline for consumers and businesses alike due to pandemic restrictions, has further spurred growth as people search for financial resources online when they splurge in the economy. digital sphere.
Industry figures also validate this trend. According to a press article, gross transactions in the BNPL space soared to $ 1.5 to $ 2 billion in 18 months compared to a few million in 2019. In addition, market projections show that India The BNPL sector is expected to reach $ 100 billion by the end of 2023.
However, the real opportunity for the industry lies beyond the B2C model. Like other lending institutions, BNPL platforms increase cash flow between people, helping them make more purchases or purchase high-value items that they couldn’t afford earlier. Hence, this business model further helps online sellers to improve their conversion rates and increase their income.
âSimpl’s offer helps build trust between merchant and consumer by introducing a ‘khata’ such as the settlement of post-purchase transactions. Additionally, Simpl offers a transaction success rate of over 99% for online retailers, as opposed to the industry average where payment failures are around 20-30%, âsays Nitya Sharma, CEO and Co-Founder by Simpl.
How Simpl builds a conversion platform
Simpl is a small ticket, mobile first a platform that offers easy credit at point of sale (PoS) and e-commerce checkouts. It offers a credit range of 1.5-20,000 INR for a 15-day interest-free cycle, but charges a small penalty as a late fee.
Interestingly, users who want to use the credit service only need to register their cell phone numbers instead of the usual documents required for due diligence. But that doesn’t give defaulters more leeway, as the startup claims to have implemented its own machine-learning-based credit underwriting system. With over 100 metrics in use, including user behavior on other trading platforms, historical behavior, app install signals and more, the system runs the metrics through various decision trees and analytical matrices.
Simpl boasts of over 25 million approved users and claims that over 90% of its monthly users are regular users.
In addition to building their B2C line of credit, Simpl has worked with thousands of merchant partners to develop an integrated payment option for them. This helps digital shoppers transact on these merchant platforms with one-click payments and often results in multiple or repeat purchases due to the ease of use. Plus, its hassle-free checkout reduced cart abandonment. Previously, the complexities of payment gateways or OTP failures kept customers away from incomplete transactions.
Simpl claims it works as a conversion platform and increases a merchant’s order volume by creating a better payment experience for consumers.
âThrough our partnerships with merchants in a few verticals like food delivery, we have seen the average order volume increase by 20-40% and the frequency by 1.5-2 times. Payment failures have also decreased by 10-30% after using Simpl, âsays Sharma.
Currently, the company works with more than 5,500 merchant partners and caters to major players such as foodtech and delivery giant Zomato, online supermarket BigBasket, hyperlocal delivery platform Dunzo, the Practo e-health platform, the Purplle beauty marketplace and more. Simpl claims to improve the conversion rate by up to 65% for its merchant partners.
What got in the way of Simpl in the B2B space
Simpl was designed to disrupt India’s low cost credit system. But initially, merchants weren’t sure its solutions could improve their income by increasing conversions.
The fintech startup was gaining traction in the B2C space, as many made use of its consumer credit lines, but B2B customers (read merchants) were unwilling to be the first to bet on it. After reaching out to many people and explaining the product and its potential, Mumbai-based cloud kitchen Faasos became the first to join us in 2017.
A merchant only needs to fill out a form on the Simpl website to initiate the onboarding process. After that, the startup’s customer relations team looks at its problems and comes up with the most suitable solutions, ranging from improving conversions to reducing the cart abandonment rate. Once the objective has been defined, Simpl shares its API access to integrate its solution into the merchant’s platform. The company works closely with merchant partners to track issues and achieve goals.
Simpl increased its merchant partnerships from 1,000 in 2019 to more than 5,500 in 2021. Among them, it integrated 2,500 merchants in 2020, when the pandemic first hit the country. The company claims monthly growth of 20% and an additional 7-fold growth in revenue since April 2020. It aims to grow 10-fold in fiscal year 22.
âSimpl is very excited to create a next-generation financial network that enables us to empower our merchant partners to build trusting relationships with their consumers,â said Sharma.