By Jeff Domansky, April 29, 2021
With the buy now pay later (BNPL) market exploding worldwide, competition for market share and consumer attention intensifies. As many as 39% of US consumers have tried BNPL, according to a February 2021 report by The Strawhecker Group, and the sheer size of the potential US market is attracting big global players and startups alike.
New York-headquartered Splitit is among the industry leaders and recently launched a new product to bolster its market position.
Splitit Plus is a new service enabling merchants of all sizes to offer payment installments to their customers in minutes. Any merchant can activate Splitit through the Splitit Plus gateway or more than 90 integrated gateway partners.
“We created Splitit Plus with a customer-first approach to provide an exceptional merchant experience with Splitit. This innovation of a payment gateway built exclusively for installments makes it a fast, simple solution for merchants of any size to begin accepting installment payments in minutes,” said Splitit CEO Brad Paterson.
Splitit builds a unique market position
Splitit differentiates itself from many competitors as a technology company as opposed to a finance company.
Patterson noted traditional BNPL companies provide a new line of credit to the consumer and manage payments to the merchant through connections with other payment gateways. Splitit Plus technology puts it all in one platform.
“We pioneered a way to allow consumers to use their existing credit cards to spread payments over time. A payment gateway typically processes card transactions. The other companies issue financing to consumers. We process installments and now do so end-to-end via our own payment gateway. We are not aware of another payment gateway that does this,” Paterson explained.
With more than 2,200 merchants now using Splitit, that message seems to be getting through clearly.
Simpler BNPL solution for merchants
Paterson said merchants wanted a simpler way to manage the installment process and reconciliation, and so Splitit created its payment gateway to allow merchants more straightforward integration and management.
“With Splitit Plus, you can now streamline processes and account management for the installment payments in one place. Our fees are deducted upfront, and we offer merchants a competitive rate compared to other payment gateways. On top of this, we help manage everything from one dashboard while including several value-added features like our chargeback concierge service,” he said.
While merchants are still responsible for responding to chargeback disputes and submitting evidence to recover lost revenue, Splitit’s partnership with AccuCharge provides the “chargeback concierge” service at no additional cost. The result should be a reduction in the number of chargeback disputes and financial impact.
Competitive pricing
With its own payment gateway, Splitit has more control over pricing and gateway transaction fees. The result is a competitive price and a single platform for merchants to manage.
“Merchants previously would pay fees directly to a payment gateway provider and then separately pay our standard fees. We had no control over the gateway pricing as this would be dictated by the gateways. This meant two accounts and two fees to manage and reconcile,” Patterson said. “We offer a competitive rate for the gateway transaction fees as well, and our fees stay the same.”
That competitive pricing and easier to manage design will no doubt resonate with retailers.
“Splitit Plus is geared towards merchants who do it themselves through our self-onboarding or add the functionality to an existing e-commerce platform like Shopify, WooCommerce, or Magento with our plugins,” he adds.
Paterson says Splitit Plus gives merchants a choice to receive the full cost of the purchase upfront or over time as shoppers pay their monthly installments. Without Splitit Plus, merchants who opt to receive payment when consumers repay their interest-free installments monthly start from 1.5% of the customer purchase and $1.50 per transaction on top of their existing transaction fees to their payment gateway provider.
“Splitit Plus combines both the Splitit installment fees and payment gateways fees, so a merchant opting for Splitit Plus and getting their funds monthly as consumer payments are made are charged a competitive 3.9% transaction fee and $0.30 per installment,” he explains.
New payment partnerships pave a competitive path
The past year has been busy for the company. It recorded record results in its fiscal year 2020 with 300% growth in revenue and a 179% increase in merchant sales volume. In an unusual strategy for a US company, Splitit IPO’d in January 2019 and listed on the Australian Securities Exchange (ASX:SPT).
In February 2021, Splitit inked a new partnership with UnionPay to offer Splitit’s installment payments for UnionPay cardholders and merchants. UnionPay has over 9 billion debit and credit cards issued in 68 countries, with over 150 million issued outside mainland China.
It partnered with QuickFees in September 2020 to offer installment payments for accounting, medical, and legal professional fees in the US and Australia. Splitit announced a multi-year agreement with Mastercard in June 2020 to offer installment payments for Mastercard merchants in the UK, Canada, and Australia.
Splitit Plus looks like an attractive option for merchants looking to offer customers the option of buy now pay later with the potential for lower costs and easier platform management.
There’s no question the BNPL space will get more crowded and more competitive, but Splitit is carving out its unique positioning with some innovative technology and merchant choices.
More information on Splitit Plus is available here.
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