CredPal CEO says BNPL a necessity for Africa

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In emerging markets like Nigeria, where credit is difficult to access or expensive, making certain daily essential purchases can be difficult for consumers when they have no choice but to pay in full, in one go. time.

As a result, filling this hole with a buy now, pay later (BNPL) service will help meet a basic need of millions of African consumers who depend on the product for their daily livelihoods.

“I always say that for the African consumer, BNPL is not a good to have – it is a basic necessity,” Fehintolu Olaogunco-founder and CEO of a consumer finance startup CredPal, said PYMNTS in an interview. “People actually want to shop, but they can’t buy because they still have to pay in full, which is a huge, huge problem for them.”

It is this problem that the Lagos-based company is trying to solve – not only for consumers, but also for online and offline merchants who can increase their average order volume by up to 40%, Olaogun said.

Since BNPL is still a relatively new product in the local market, it has been essential to educate consumers on the impact of their unique circumstances on their credit limit.

“[We tell customers]’Even if you want to buy an item that costs a million naira [$2,000]we’re only going to credit you with half of it because you’re making X monthly salary,” he explained, adding that this strategy also prevents consumers from taking on more debt than they can afford.

Read more: CredPal raises $15 million for BNPL improvements

Since its launch in 2018, the Africa-focused BNPL has grown significantly and recently raised $15 million to expand its consumer credit offerings in Nigeria and expand into new markets. regions where BNPL’s activity is gaining ground – Kenya, Cameroon, Egypt and Ghana.

Cast: The devil is in the details

Along with the new capital injection, CredPal also plans to launch new merchant partnerships on CredPal Pay, a merchant suite enabling online and physical businesses to seamlessly onboard customers and accept BNPL services.

“[The technology] takes most of the pain of having to onboard and train merchants on how to use the tools, noted Olaogun, adding that the infrastructure will help accelerate the company’s growth and facilitate its expansion into many new long-term markets.

However, to achieve this goal, one of the biggest hurdles the company has to overcome is the distribution and acquisition of a significant number of merchants.

“You need to be able to onboard as many merchants as possible because that’s your main distribution channel,” he said.

This can be “difficult” because even if merchants quickly adopt the product, several things must first take place before they can make their first transaction, and not all small retailers they approach follow these steps.

For example, a merchant who is excited to use the product may go through the onboarding process, but since they don’t own the store, the value of making CredPal the first and primary payment option may diminish over time. , Olaogun explained.

“So while there is a lot of interest from merchants, between that interest and the actual rollout and the first transaction, there are a few things you need to take care of – as I say, the devil is in the details “, he continued.

Smartphones, Internet fuel the growth of BNPL

Due to the increase in online shopping and use of technology due to the pandemic, Olaogun said there has been an increase in the adoption of CredPay’s mobile app, which has alleviated the pain point of having to distribute from the merchant’s point of sale.

People are starting to want to live better, he continued, “and BNPL is exactly what they need to be able to afford things. [like electronics] and pay them over time instead of having to pay them once.

Growth in smartphone and internet usage has also fueled BNPL’s growth on the continent, he added, enabling users – many of whom obtained their first smartphones through CredPal – to be included financially and numerically.

“All of this is helping us increase demand on the electronics side, which is good for us, and we’re seeing that continue to increase even as we expand into other markets,” Olaogun said.

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