By Oliver Smith on Tuesday 15 June 2021
A new frontline is forming for alternative credit providers like Klarna and Laybuy.
Virtual buy-now-pay-later (BNPL) cards are fast becoming the latest fintech trend.
First Klarna added BNPL cards to its app, letting you split purchases from any online retailer including Amazon and eBay. Now with Laybuy is doing the same thing—albeit with a virtual card that can be used in high street stores via Apple Pay or Google Pay.
“The vast majority of our customers don’t like using credit cards and have been asking us how they can get the benefits of Laybuy, but on the High Street,” said Gary Rohloff, managing director and co-founder of Laybuy.
“In fact, 86 per cent of our customers looking to return to stores have explicitly requested the option of using Laybuy in-store, too. Today, we’re making that a reality.”
Laybuy’s solution to getting its service in more places is similar to Klarna’s, in that it’s creating a virtual BNPL card that is designed to be added to a mobile wallet like Apple Pay. Klarna’s solution, meanwhile, is designed for online checkouts that haven’t adopted Klarna yet.
When you spend with Laybuy’s card, purchases are automatically split into six weekly payments, which are taken from whichever payment method you’ve added to your Laybuy account.
Unlike Klarna, Laybuy seems less keen to annoy its retail partners, at least at first, saying that its ‘Tap to Pay’ virtual card will initially only work at merchants that have a relationship with Laybuy.
In the future, Rohloff says the plan is to let customers use the card at all leading retail brands, although this is far more diplomatic than Klarna’s approach of launching a virtual card that works at any online retailer.
The challenge faced by buy-now-pay-later providers in the early days was always retailer adoption.
Klarna, Clearpay and Laybuy needed large sales teams to convince the likes of Asos, BooHoo, Wilko and others to jump through the technological hoops needed to add their payment options to online checkouts.
But jump they did, and as consumers grew to expect payment options beyond just credit and debit cards, the scale started to tip in BNPL’s favour.
Today we see Klarna and Laybuy actively inserting themselves into the checkout experience through the launch of virtual BNPL cards, whether retailers consent or not.
The gamble both brands are making is that buy-now-pay-later is now so widespread and valuable, to retailers and consumers, that ditching or blocking their services is unthinkable.
And they’re probably right.
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