UK fintech companies plunge into the craze

Monzo and Revolut, two of the UK’s most prominent financial technology (fintech) companies, plan to join the booming “buy now, pay later” payment services industry.

Monzo is about to announce plans to roll out its own version of BNPL. Photo: Monzo

“Buy First, Pay Later” or BNPL for short, is an increasingly popular payment method that allows users to pay with a range of interest-free installments. This trend is pioneered by Swedish fintech company Klarna and Payments Company Australia Afterpay.

This form of payment is attracting the attention of many international payment companies, with PayPal launching its own BNPL service, Amazon and Apple partnering with US supplier Affirm, and Afterpay selling itself to Square. , a payments company owned by Twitter CEO Jack Dorsey.

Two of the UK’s best-known fintech companies are also trying to break into this space. Monzo is about to announce plans to launch its own version of BNPL, a source familiar with the matter told CNBC.

This source added that Monzo Digital Bank will introduce a payment checking application for customers. This news was also previously reported by London’s Evening Standard.

Fintech company Revolut, Nik Storonsky, told the Evening Standard earlier this week that the company is developing its own “buy now, pay later” platform.

Revolut has been licensed by Lithuania as a bank in Europe and is currently seeking additional licenses to operate in the US and Australia. Revolut was recently valued at $33 billion following a $800 million funding round led by SoftBank and Tiger Global.

Meanwhile, Monzo, unlike Revolut, is a UK regulated bank. Monzo is smaller than Revolut, with 5 million customers and a valuation of £1.25 billion ($1.7 billion).

Revolut said that now the number of users of their service has exceeded 15 million. Starling, another BNPL player in the UK, currently has more than 2 million clients and was most recently valued at £1.1 billion.

Despite the rapid development, the BNPL industry has not yet received much attention from the authorities of many countries.

In the UK, the government has set out a plan to enact regulations for the BNPL sector. Proposals announced by the Ministry of Finance earlier this year include requiring companies operating in the sector to check their ability to pay before lending to customers as well as the ability to complain to the Ombudsman finance.

According to a report released by the UK’s Financial Conduct Authority (FCA) earlier this year, the country’s BNPL market has reached £2.7 billion in size, with 5 million Britons using the products. BNPL since the Covid-19 pandemic appeared. More than 1 in 10 customers of a major bank using BNPL services are still in debt, the UK Financial Conduct Authority reports.

“FCA has taken an important step in getting BNPL into the spotlight, with a review they published earlier this year and they will no doubt increase their scrutiny as BNPL’s popularity in the market increases.” Mr. David Brear, CEO of fintech consulting firm 11:FS (London).

About Monzo, Mr. David Brear said: “Unlike some other BNPL providers in the UK, Monzo is an FCA regulated entity and will not do anything to risk their reputation with the agency.”