Dutch BNPL In3 set to expand into Northern Europe

The Buy Now Pay Later (BNPL) industry is booming.

The concept, basically a form of short-term financing, allows customers to pay for products in installments with little or no interest. Loans are granted on an individual payment basis and credit checks are almost instantaneous, providing a cheaper and easier alternative to a credit card.

Representing a 3% market share of global domestic e-commerce payments, investment in the sector is prolific. Global leader Klarna alone has benefited from more than €2.6 billion since 2014, and funding for the industry as a whole reached $11 billion in 2021.

Between 2018 and 2020, the value of BNPL transactions increased by 292%, and many expect a continued increase in market share, with reports forecasting it will reach 11% in Europe by 2025.

In the Netherlands, the company BNPL In3 has participated in this growth and is now ready to expand into other markets, approaching the BNPL model which does not quite fit the typical mould.

CEO Hanz Langenhuizen

“If you want to start an In3 proposition, the Netherlands is the hardest market to start,” CEO Hanz Langenhuizen said.

“Consumers are the toughest. For example, when the economy slows down and in all other countries credit card spending goes up, in the Netherlands credit card spending goes down. Despite the difficult market, the company has continued to grow steadily and is poised to expand.

Dutch BNPL Trust

Perhaps the Dutch reluctance to opt for credit payments is the reason for adopting BNPL’s alternative solution. BNPL’s market share in domestic e-commerce payments in the Netherlands is 12%, with an expected growth of 78.4%.

According to the data, almost 75% of global BNPL users are millennials or Gen Z, with higher levels seen among younger customers.

“The average consumers we have are mostly families with two sources of income, two to three children, and above-average incomes,” Langenhuizen said.

Younger generations, on average, are using the service for less expensive items, with the average purchase for Gen Z customers being less than $100. At In3, payments tend to be for higher end and more expensive items, indicating the older consumer.

Many clients turn to BNPL because of the financial flexibility it offers without the need for time-consuming and cumbersome credit checks. It is not without its drawbacks.

Credit Karma report shows missed payments

A report by Credit Karma showed that 34% of clients who used BNPL in the past year had fallen behind in their payments and incurred late fees.

“For us, social responsibility is our business model,” Langenhuizen commented in response to the figure.

“If our non-performing loans exceed a certain threshold, we will be bankrupt. So for us, it’s really important to have a very good credit engine and to have a very low rate of non-performing loans for people to pay. We also do not ask them to pay any additional fees or costs for using the In3 proposal.

This approach has rewarded the company with extremely low non-payment levels and a steady growth trajectory.

“It’s all about the credit engine. It is a combination of merchant rating and consumer rating. That’s why we’re doing so well. »

With AI, Langenhuizen says they can assess both parties in a tenth of a second to ensure the loan is low risk and payment will be made on time.

“We are now expanding to Germany, then to the Nordic countries. It has to do with how we can get consumer information…in Germany and the Nordics they are very well maintained so we can get the information we need to operate,” he continued. .

In3 offers its services online and in-store to selected merchants, where they plan to expand their service offering, working with two of Europe’s largest service providers for in-store payments.

These expansion plans come as the company secured $11.1 million from Finch Capital to develop the technology platform and improve its customer satisfaction rating, which currently stands at 9.3/10.

Mary I. Bruner