Panayot Ivanov for Capital: The popularity of the BNPL model will grow drastically in Bulgaria
11.11.2021 Share +
With the official launch of our Buy now, Pay later (BNPL) solution in Bulgaria, we can't wait to tell you more about how it works, how it helps our merchant partners grow their sales and why it is a preffered payment method by clients. This is why Panayot Ivanov, SVP Strategic Projects, was invited by Capital media to share more on the topic. Take a look and find out for yourself:
To what extend do users adopt ‘Buy now, Pay later’ payment method in Bulgaria?
Keeping in mind that “Buy now, Pay later” is a new term on the Bulgarian market, I would first like to clarify what is this new payment method. BNPL gives the clients the opportunity to finance their chosen goods or services by making 4 equal instalments without any interest or fees. The first 25% of the payment is due at the moment of the purchase and the other 3 parts should be paid within the following 3 months.
To illustrate it with an example: if a client wants to purchase goods for 200 BGN and they want to finance them with BNPL, the first amount due at the time of the purchase will be 50 BGN and the remaining 150 BGN are split into 3 equal 50 BGN parts that have to be paid in the 3 months following the purchase.
For the limited time that BNPL has been on the Bulgarian market, the overall customer perception has been quite positive and its advantages – highly appreciated. Of course, most of the users fall into the early adopters’ profile, but our expectations are that its popularity will drastically increase thanks to the growing number of merchants who integrate it as a payment method.
Do you identify a risk in this payment model and what are your predictions for its future?
Being positioned at the overlap between payment solutions and loan products, BNPL has a significantly lower credit risk and comes with a higher approval rate, which is great news for the businesses that want to integrate it. Additionally, the experience of the leading BNPL providers across the globe shows fairly stable, and in some cases even decreasing risk levels, with the increased usage of the BNPL by the end customers. My expectation is that these trends will materialize on our markets as well.
How do you evaluate the demand for BNPL?
This model is relatively new for the Bulgarian market but it already generates significant levels of interest. For less than a month since the official launch on the local market, we have more than 100 merchant partners that have integrated our checkout solution in their online stores. In addition, there are over 50 businesses that are currently being onboarded. And we also have to take into account that some of them are amongst the leading retailers in Bulgaria.
Based on your observations, has customer behavior changed as a result of the pandemic?
Our view on the market shows a growing tendency for the clients to migrate towards e-commerce solutions. However, physical stores still hold the bigger share when it comes to shopping which only affirms our “phygital” model and its growing popularity amongst retailers. Yet, the more fundamental trend that we observe is the great user acceptance of holistic solutions that improve the whole customer journey. BNPL can be a good example here as it has positive impact on some of the most significant stages of the shopping experience. On one side, it provides the client with the best payment method that does not lead to interest, fees or taxes, while also offering the end customer the opportunity to try the purchased goods before they are paid in full.
What changes do you predict in terms of payment methods and financial services? What is TBI’s place in the industry?
I expect the most substantial change in the payments sector to come from BNPL, which will become one of the most preferred methods by the Bulgarians for financing their purchases. The positives for consumers and retailers make this model ever more popular in all global markets and I am confident that this will happen in Bulgaria as well. In this regard, the role of TBI, the first bank to provide this model on the Bulgarian market, will be of a preferred partner for a growing number of online and in-store businesses in Bulgaria. The reason - the BNPL model offered by TBI provides the best conditions on the market – deferring the payment for up to 3 months.