It is impossible to talk about 21st-century financial services without the word disruptions. Fintechs are at the center of this disruption, as they aim to digitize banking and payments. Lately, a new payment trend has been gaining traction in the digital payment space, and it is expected to hit $680 billion by 2025. If you are thinking about BNPL, yes, you are correct.
Despite the popularity of BNPL in developed countries, the same cannot be said about Africa. In Africa, BNPL is still in Infancy at best. To quote Olumuyiwa, "While a few organizations offer Buy Now Pay Later (BNPL) services, clear market leaders have not yet emerged." This might be about to change as Carbon steps into the BNPL space with the launch of Carbon Zero.
Carbon Zero - Giving consumers unlimited access to merchants
Carbon's BNPL solution Carbon Zero enables customers to buy products instantly while paying in small equal installments at a 0% interest rate. Recognizing the opportunity to serve customers using a direct-to-customer (D2C) approach, Carbon intends to integrate its BNPL solution into the banking application.
With their Carbon debit cards, shoppers would be able to make purchases across any store of their choice, online or in-store. They will only make a 25% upfront payment and split the rest over six weeks (terms for its initial proposition).
According to the company, "This makes Carbon the first BNPL provider in Africa to offer a merchant-agnostic solution, with customers shopping anywhere its Visa-powered debit is accepted. In a field where many players replicate the same service across the board, the Carbon team aims to take a different approach."
Carbon Zero will continually adapt to the local environment, operating across multiple verticals and ensuring the product is the right fit for local consumers. Carbon CEO, Chijioke Dozie
The future is BNPL
In developed countries, BNPL is slowly becoming a norm, especially amongst Gen Z and Millenials. In the U.S., 75% of buy now pay later users belong to this age demographic. Half of BNPL consumers have stopped using their credit cards altogether in Australia, opting instead for interest-free installments.
Institutions have a way of being exported because of globalization. If there are institutional changes abroad, it's only a matter of time before such a trend surfaces in Africa.
A structure similar to countries where BNPL is already matured is already surfacing in Africa. This is as a result of
1. Increasing demand for more convenient payment plans from the majority of Millennials and older Gen Zs.
2. Growth in e-Commerce.
An increase in the adoption rate of BNPL solutions in Africa is only a matter of time as the popularity of this payment solution grows. To quote TechCrunch, "Think of what happens when these consumers get a taste of low or no-interest alternative financing options that BNPL players provide: adoption rates will be off the charts."
Sub Sahara Africa in focus
GDP: $1.686 trillion in 2020 compared to $1.77 trillion in 2019
Population: 1.136 billion in 2020 compared to 1.107 billion in 2019
GDP per capita: $1,483 in 2020 compared to $1,559 in 2019