Develop a Cutting-Edge BNPL Solution and Capitalize on the Growing Market Demand
Payment Gateways, Online Money Transfers, Digital Banking, Online Loans, and more and more app-based solutions keep emerging in FinTech, and the solution providers earn millions.
And here you are reading this because you either want to expand your FinTech business by penetrating the most demanding market; Or build a universal solution that comes in handy for every other business, irrespective of the industry, to attract more customers. Both motives point at the recently exploding FinTech app idea, i.e., the Buy Now Pay Later Application.
As a result of more consumers taking advantage of BNPL, the transaction amount was valued at $200 billion in 2022.
In fact, 4 in 5 consumers in the USA use BNPL on everything from clothing to cleaning supplies, and most shoppers believe that BNPL could replace their traditional payment methods like Credit Cards.
Speaking of credit, more often than not, businesses buy goods on credit because of insufficient capital, and building a BNPL solution for business-to-business transactions can be ground-breaking. Given the solution can spare small businesses and startups from dealing with credit scoring, revenue, collateral, etc.
Above all, this space in the Buy Now Pay Later app development market isn’t crowded like the B2C BNPL apps. This means you will have the first-mover advantage.
Interested to know more about how to develop a Buy Now Pay Later app?
Keep going…
So, What is BNPL?
Before diving into Buy Now Pay Later app development, let’s understand what BNPL is.
BNPL is a payment method that allows customers (merchants or shoppers) to purchase goods or services and pay for them in installments (four majorly). It eliminates the need to pay the total amount upfront, making it easier for customers to afford expensive purchases.
Therefore, BNPL is a win-win for both businesses and customers. For customers, it offers flexibility in payments and helps them manage their budgets effectively. On the other hand, businesses benefit from increased sales and improved cash flow.
The popularity of BNPL solutions has been on the rise, and it’s no wonder why developing a BNPL app solution has become a potential FinTech startup idea.
What matters is what you do to shine your BNPL solution brightest among the rest. Offering a B2B solution is one way. But how to build one? Let’s explore, followed by understanding the basic workflow of any Buy Now Pay Later solution.
How does BNPL work?
Let us take a hypothesis to understand how Buy Now Pay Later works.
Suppose a merchant buys goods of $100000 value but doesn’t have full money on hand to pay right away. So, he signs up for a Buy Now Pay Later app that helps him by paying the full amount to the vendor.
The merchant will now have to pay the amount to the BNPL service provider instead in four monthly installments of $25000 each, with the first due at the time of purchase.
Meaning the merchant will pay $25000 at the time of the purchase and receive the goods delivery.
The BNPL service provider offers four months to pay back the purchase amount. However, if the merchant fails to pay within interest-free periods, he will be charged 5%. That means the merchant has to pay an additional $5000 as a late payment fee.
Why do B2B customers care a lot about Buy Now Pay Later offers?
It is necessary to know if there is even a demand for the solution you are going to invest your time and money to develop. So, let us validate with the information I found, confirming why creating a Buy Now Pay Later app for B2B specifically can get you ahead of other solutions.
Eliminate the upfront capital need for merchants:
A B2B Buy Now Pay Later app allows merchants to procure goods on credit for a short time without worrying about their credit score. They can simply install the app, request the payment showing the required documents, and voila! The app pays on their behalf. This way, they don’t need to pay the full amount upfront but as much as the app requires them to.
Convenient payback terms:
Another crucial factor that makes Buy Now Pay Later offers attractive to B2B customers is the flexibility they offer in repayment options. For example, some Buy Now Pay Later apps allow businesses to spread payments over a more extended period with smaller, more manageable payments.
This flexibility can be particularly valuable for small businesses or startups that may have limited resources and cash flow. With flexible repayment options, businesses can make necessary purchases to grow their operations without compromising their financial stability.
Interest-free period:
One of the significant reasons why B2B customers care about Buy Now Pay Later offers is the interest-free period. These offers provide a specific timeframe for customers to pay off their purchases without any additional interest or fees.
This can be particularly attractive for businesses that require significant capital investments in inventory or equipment. Instead of paying the full amount upfront, businesses can take advantage of interest-free financing options and make payments over time, reducing the strain on their cash flow.
Existing Buy Now Pay Later app solutions
Affirm — San Francisco
Founding Year: 2012
Total Funding: $1.5B
USP: Transparent and flexible payment plans for point-of-sale financing.
Uplift — Menlo Park
Founding Year: 2014
Total Funding: $689M
USP: Travel-focused Buy Now Pay Later solutions with customized payment plans.
Quadpay (now Zip) — Greater New York
Founding Year: 2017
Total Funding: $893.6M
USP: Flexible, interest-free installment plans.
Klarna — Stockholm, Sweden
Founding Year: 2005
Total Funding: $4.5B
USP: Smooth and easy-to-use payment platform.
PastPay — Budapest, Hungary
Founding Year: 2019
Total Funding: €1.2M
USP: Payment method to add on eCommerce platforms.
Billie — Berlin, Germany
Founding Year: 2016
Total Funding: $349.2M
USP: Efficient payment solutions for small businesses.
How to develop a Buy Now Pay Later Application like Klarna?
Developing a Buy Now Pay Later (BNPL) application like Klarna can be a lucrative venture. However, it requires careful planning, a deep understanding of the market, and the right technology stack. So, let’s take a closer look at how to develop a BNPL app like Klarna that’s both innovative and profitable.
Business Model
The first step in developing a successful BNPL app is choosing a suitable business model. Two primary business models for BNPL app development are B2C and B2B.
B2C models target individual consumers, while B2B models target businesses. B2C models typically offer lower loan amounts and shorter repayment terms, while B2B models offer higher loan amounts and longer repayment terms. Consider your target audience and choose the model that best suits their needs.
Understand the market
Before you begin development, research the market to learn what features and functionalities your app should have to succeed. Moreover, if you want to create a successful Buy Now Pay Later (BNPL) solution, it’s essential to understand the market. Learn about:
- Your competitors and their offerings
- Your target audience and their buying habits
- Any regulatory or compliance issues that may impact your solution
For example, Klarna, a popular BNPL app, offers interest-free financing and flexible payment options to target millennial shoppers who prefer to pay in installments rather than upfront.
Technology Stack
When building a Buy Now Pay Later (BNPL) app, you can consider the following technology stack:
Essential technologies for Android and iOS app development:
- Kotlin or Java for Android app development
- Swift or Objective-C for iOS app development
- Payment gateway integration for secure transactions
- Push notifications for reminders and alerts
Advanced technologies to make your BNPL app competitive:
- Machine learning algorithms for credit scoring and fraud detection
- Blockchain technology for secure and transparent transactions
- Cloud computing for scalability and data management
Basically, you need to choose the technologies that best fit your app’s needs and budget.
Choose the Technology Partner
Choosing a fintech app development company is critical to the success of your project. So, while you are on the quest for a reliable and supportive technology partner for your BNPL app development, consider the following:
- Check their portfolio and experience in developing fintech apps
- Look for relevant industry certifications and expertise
- Evaluate their team’s technical skills and communication capabilities
- Consider their project management and delivery processes
- Check their pricing models and contracts
The best technology partner is one that aligns with your vision, goals, and budget.
How Much does it cost to build a Buy Now Pay Later application like Klarna?
The cost of building a Buy Now Pay Later (BNPL) application like Klarna depends on various factors, such as the app’s features, complexity, and technology stack. Here are some points to consider when estimating the development cost:
- A basic BNPL app with standard features can cost around $20,000-$50,000.
- An advanced BNPL app with custom features and integrations can cost $100,000-$500,000 or more.
- Developers’ rates vary based on their location and experience. For instance, a developer’s hourly rate in North America is $100-$200, while in Eastern Europe, it is $30-$80.
- The technology stack and infrastructure can impact the development cost. For example, integrating blockchain technology can increase the cost due to its complexity.
- Testing, maintenance, and updates are additional costs that need to be considered.
Keep in mind that these are rough estimates, and the actual cost can vary based on your specific requirements and project scope. It is recommended to consult with a reliable technology partner to get an accurate cost estimate.
Building a BNPL app like Klarna requires a significant investment of time, money, and effort. However, it can also offer substantial returns and help your business stand out in a crowded market over time.
Join the BNPL Boom to Disrupt the Payment Landscape
Altogether, developing a Buy Now Pay Later (BNPL) application can be a profitable business venture as it addresses the needs of both B2C and B2B customers. To create a successful BNPL solution, it is essential to understand the market, choose a suitable business model, and incorporate the right technology stack.
Whereas developing a BNPL app can cost between $50,000 to $300,000 or more, depending on the features, complexity, and the tech partner’s hourly rates. Therefore, it is advisable to consult a reliable tech partner to help with BNPL app development, as they can provide valuable insights, expertise, and a tailor-made solution for your business needs.
