Powerful Credit Engine, Key Partnerships for Big Wins

The pandemic and associated economic hardships have given way to a global buy-now, pay-later (BNPL) boom, with consumers embracing the option of paying for goods in interest-free installments, rather than using payments by high interest card.

According to recent data collected by PYMNTS, in 2021 BNPL usage among US consumers jumped 81% from 2020 figures, with the service gaining traction across all age groups.

Read more: PYMNTS Intelligence: BNPL offers flexibility and purchasing power to young consumers

In the Netherlands, Dutch company BNPL FinTech in3 has capitalized on the upward trend in recent years and has seen its revenue increase by 300% year-on-year since its launch in 2018.

According to CEO Hans Langenhuizen, the company’s winning strategy has been to give customers the freedom to buy the items they want, while setting the credit supply at a limit they can afford.

He said that with some BNPL models, the fee can add up to more than the original purchase cost, so someone buying a jacket for €50 could end up paying a total of €80 after using it. these BNPL solutions.

“We don’t charge fees – that’s the credit card industry,” Langenhuizen told PYMNTS in a recent interview. “That’s what people do in other [financial organizations] to make more money from the fees and revenue they make from traders.

See also: One-Click Payment Experience Drives European Consumer Adoption of BNPL

To differentiate itself from other players, the Amsterdam-based player BNPL has instead adopted a business model centered on merchant fees. Since in3 incurs losses when customers default on loans, it was critical to ensure they were lending the right amount to the right customers.

“Having a very good credit engine is very important in determining whether someone who wants to buy from us, in combination with the merchant they are buying from, is able to purchase the goods and pay on time – because otherwise we don’t make any money,” explained Langenhuizen.

So far, it looks like the infrastructure investments are paying off. He said their percentage of non-performing loans is “five to 10 times lower” than their competitors, and their credit engines are able to predict in seconds – and at a 99% accuracy rate – if a potential customer will be able to repay the loan on time.

A win-win partnership

The company currently provides more than 1,500 online and offline merchants with BNPL payment solutions, serving customers including UK car maintenance and repair company Kwik Fit and Dutch companies La Souris, Matt Sleeps and Dekbed-Discounter.

To further grow its business, the FinTech recently closed an $11.1 million funding round and partnered with global digital payments leader Worldline to enable merchants who are part of the Worldline network to offer payment services. BNPL payment to their customers without additional integrations.

In return, in3 will gain access to Worldline’s 125,000 merchants – a “win-win situation” for both partners, Langenhuizen said. To take it up a notch, the product is now available in physical stores, allowing in3 customers to pay with an app while boosting demand and awareness around the BNPL service.

While some top BNPL companies are facing regulatory issues to curb overspending, Langenhuizen was optimistic that for in3 there was no need to worry.

“We are adopting the regulations because our business is not to collect fees, [and] regulators love us because our business model is really clean,” he said. “That’s why we say, ‘You can come up with regulation, we’re ready for that. “”

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