Buy Now, Pay Later service is becoming more popular nowadays. According to Fisher, Holland, and West (2021), ‘buy now, pay later’ (BNPL) services are growing significantly and, thus, have become more prevalent in recent years. For instance, Paypal’s ‘Pay in 4’ is an excellent example of a widespread payments service provider’s BNPL product. Glassman (2021) discusses the pros and cons of Paypal’s ‘Pay in 4’. One of the significant advantages of the service is that there is no fee to sign up. In addition, Paypal conducts a soft credit check that doesn’t influence the client’s credit score. Significantly, Paypal also ensures an immediate approval process, and transactions can be made in various currencies; the currency conversion is done automatically (Paypal). Finally, the company cooperates with many popular online stores to make the service accessible everywhere. Glassman (2021) emphasizes that the ‘Pay in 4’ service enables purchases ranging from 30 to 1,500 dollars and pays in four interest-free payments (Paypal, n.d.). Thus, this feature turned out to be a crucial disadvantage because customers cannot exceed the limit. Another disadvantage of the system is that there is no effortless breakdown of late fee costs. ‘Pay in 4’ service is a suitable financial option for personal usage if the client wants to pay for the purchase over a shorter time (Glassman, 2021). Nevertheless, other companies offer more flexible payment plans and no purchase limits, such as Klarna or Tabby.
Klarna and its Cooperation with Visa
The BNPL revolution includes credit card companies like Visa integrating the business into an emerging field of ‘shopping online and paying later.’ The global expansion of Visa Installments Solution supports many BNPL providers (Visa, 2021). Recently, Visa signed a contract with Klarna in order to enhance its growth and target new markets (Visa, 2021). Klarna is an international fintech company that offers BNPL services. Klarna offers to split the purchase into four interest-free payments, online or in-store, and a 5 dollars welcome reward when the customer installs the application (Klarna, n.d.). The company also offers additional tips when a customer buys from world-class brands. The most significant advantage is that customers can pay via the Klarna smartphone application or anywhere Visa is accepted. Moreover, Klarna instantly approves payments and does not impact customers’ credit scores (Klarna, n.d.). Klarna is different from other competitors because it offers you can even use it in-store or the ‘payment in 4’ can be made from the computer. Notably, there are no interest or additional fees.
Tamara
Notably, Tamara is the primary ‘Buy Now Pay Later’ provider in the Middle East and North Africa, with the main focus on Saudi Arabia, and a local competitor of Tabby. According to the official website, Tamara offers two options for customers, such as ‘pay in thirty days’ and ‘split into three payments with zero interest’ (Tamara, n.d.). Thus, customers can split the cost into three payments without fees in sixty days or pay thirty days after the purchase was made without any additional fees (Tamara, n.d.). Tamara is not available globally like Paypal and Klarna; nevertheless, the company provides opportunities to shop from many local shops, such as Namshi and Saco. The benefits of Tamara include the payment terms’ flexibility, no interest or fees. Tamara does not ask to fill forms; the process is user-friendly.
In comparison, Tabby offers to divide the payment into four interest-free payments, which is better for customers who need a more extended period to finalize the payment. In addition, the considerable advantage of Tabby is that the provider offers customers to earn cashback when shopping at partners’ brands that they can withdraw (Tabby, n.d.). Tabby has the same strategy of no interest in fees if the customers pay on time.
Comparison and Role Model Creation
The role model was identified after analyzing three BNPL providers, namely Paypal, Klarna, and Tamara, and comparing them and bench marketing to Tabby. The table below demonstrates the companies’ comparison through payment terms, interests, fees, benefits, and disadvantages. First of all, Tabby is a better option than Paypal, despite Paypal’s global availability, because Paypal has a purchase limit. Secondly, Tabby offers an opportunity of earning cashback, which makes it an attractive BNPL provider compared to Paypal and Tamara. Tabby has better offerings when Tamara has no additional benefits like rewards or cashback when comparing Tamara and Tabby.
Table 1. Comparison
To conclude, Klarna was identified as a role model for Tabby. Significantly, Klarna’s payment terms are flexible; customers can pay in 30 days or divide the payment into four parts. Beneficially, there are no interest or fees, and the company offers a vast amount of rewards. The vital advantage is that Klarna provides a possibility to pay from the smartphone application and the laptop. Additionally, there is a possibility to pay in-store, which distinguishes Klarna from other BNPL providers. Therefore, Tabby is recommended to investigate Klarna’s strategy in detail in order to improve and grow globally. Significantly, Tabby has a chance to enter more markets if attracting potential customers through introducing the in-store and laptop payment possibilities as well as more rewards for regular customers.
References
Klarna. (n.d.). Pay in 4. Anywhere. Klarna. Web.
Paypal. (n.d.). What is Pay in 4? Paypal. Web.
Tabby. (n.d.). Shop now. Pay later. Earn cash. Tabby. Web.
Visa. (2021). Visa helping fuel ‘Buy Now, Pay Later’ growth around the world.Visa. Web.
Glassman, T. (2021). PayPal Pay in 4: How it works, fees and risks. Finder. Web.
Fisher, C., Holland, C., & West, T. (2021). Developments in the buy now, pay later market. Bulletin. Web.