Consumption and payments, next round at retail POS

In brief
Le opzioni "buy now, pay later" (BNPL), per dilazionare i pagamenti, sono in forte crescita nel mondo. E' una conseguenza delle difficoltà economiche indotte dall'emergenza sanitaria. Per i retailer, l'incentivazione dei consumi a difesa dei volumi di vendita passa sempre più frequentemente per le agevolazioni al check-out. La contrapposizione tra il pagamento tradizionale via POS e le nuove formule di credito (o...debito?) al consumo, quindi, si fa accesa e spiega le mosse di vecchi e nuovi gestori dei servizi finanziari.

Consumption and payments are forcing retailers to adapt to the new ways in which consumers buy and pay, and the way in which they pay becomes the focal point of competition, customer engagement and protection of sales volumes.


The Buy Now, Pay Later(BNPL) options have seen a strong worldwide increase in recent months and are offered by most retailers on their websites, helping to make it easier for customers to defer payments at the time of checkout.

Given the economic difficulties induced by the pandemic, the decision to split the total purchase into instalments is an increasingly attractive option. Companies like Affirm, ChargeAfter, Earnest, Klarna, LendUp, Sezzle and others offer innovative ways to borrow and finance purchases without using the POS in the traditional way.The profitability of these services consists of the commissions paid by sellers on purchases and of the interest paid by customers in case of late payment.

A quick look through the list of large distributors adopting the new payments systems gives immediately the idea of the evolution taking place. In Italy, brands such as Inditex, H&M, Sephora, Michael Kors, Mango, Wayfair, IKEA, Expedia Group, Samsung, AliExpress, ASOS, Boohoo, Ray-Ban, Levi’s, Ticketmaster, Abercrombie & Fitch and Nike, are just some of the most resonant cases.


The way to defer the payment is very easy. Looking at Klarna, for example, it can be summarized in “3 instalments in 3 steps”.

  • When paying, the customer selects the option to pay in three instalments, without interest, and enters his credit or debit card details.
  • When the order is dispatched, the customer is notified of the first charge on the card.
  • The rest of the payments will be automatically debited to the card every 30 days, until the full amount has been paid.

Banks favour the consolidated credit card system due to the high interest rates, and the total amount of outstanding debt is now estimated at more than one thousand billion dollars. But, today, the availability of traditional credit sources is gradually decreasing as the economic impact of Covid-19 makes it more difficult to predict the effective solvency of consumers.


The upcoming holiday season will already be a testing ground for the new balance of power between old and new players in payments processing. Ahead of this busy shopping season, Klarna entered a partnership with Macy’s (the oldest U.S. department stores chain, with revenues of 25 billion dollars) to allow online customers to purchase with BNPL.

The partnership with large retail chains allows Klarna to reach a wider consumer base and increase the volume of pre-holiday payments.For Macy’s, instead, given the recent increase in online sales (+54% year-over-year in the second quarter of 2020), the partnership will facilitate the engagement of new customers, especially among younger shoppers, who don’t love credit cards.


Afterpay and Simon Property, the largest shopping malls operator in the U.S., have entered into an agreement to offer BNPL services to retail tenants in over 200 malls nationwide.For the financial operator, the strategic value of the operation is particularly evident, given that it significantly extends its range of action in the offline market, diversifying and expanding its customers outreach and increasing the channels from which it can draw sales.


The implementation of BNPL services should push consumption and maximize retailers’ sales potential. As a result of the pandemic and the inevitable drop in consumer spending capacity and willingness, offering flexible and popular payment options could incentivize sales growth.

It’s the common goal of retailers and BNPL providers that explains the success of these operators. Affirm recently raised $500 million and announced a new valuation of $3 billion.Klarna has recently raised $650 million which would value it at more than $10 billion. The willingness of investors to commit such large amounts of capital, at such high values, is a clear indicator of the extent of the competition.


According to, however, “BNPL is encouraging young consumers to spend more than they can afford”. The Times has even recently headlined “The Klarna question: saviour of the high street or a debt time bomb?”.Same orientation for The Guardian. The answer of the providers is simple: This is not so because the availability of the service is granted only after a complex algorithm has calculated the risk coefficient of the buyer, based on behavioural and financial information.

But what happens if you buy with the BNPL option and fail to pay? The service providers claim that, only as a last resort, the unpaid debt will be referred to a debt collection agency. But it’s not that simple: the very frequent case of disputing a returned item, or any dispute over the purchase, is enough to be chased by an agency even during the return phase.


The new payment actors are able to grab significant market share from the banks. The battle between these financial institutions, established players on the scene and newcomers of alternative forms of payment is such as to push VISA to run for cover, investing in Klarna and ChargeAfter.

Zahir Khoja, Mastercard’sExecutive Vice President, said in an interview with Forbes: “It’s time for us to really unlearn everything… as everything is being disrupted by innovative technologies”. This is all the more the case for retail, which must assume –as Chris Hjelm, Kroger’s EVP puts it – the connotation of a techno-centric sector. Outside the shop, the customer doesn’t wait. He looks for another one.