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- Buy now, pay later startups have traditionally reached online shoppers through partnerships with merchants.
- Now, players like QuadPay have launched apps that give users the ability to shop at nearly any store and pay for their purchases in installments in-person.
- QuadPay’s consumer app is powered by the $36 billion fintech Stripe.
- Stripe Issuing, a self-service card issuing API, launched out of beta in April and is available to all businesses in the US.
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The coronavirus pandemic has caused a shift in consumer spending behavior toward e-commerce. But as merchants look toward a post-COVID World, they’re looking for ways to make best use of their real estate footprints and link their in-store and online sales.
Buy now, pay later startups, too, are riding this wave of connecting the online and in-store experiences. Over the past few years, startups like Affirm, Afterpay, Klarna, and QuadPay have come on the scene offering shoppers the option to split their e-commerce purchases into installment payments. And they all got their start by partnering with merchants to embed their product in online checkout windows.
Buy now, pay later startup QuadPay has now launched a new way for its users to shop at almost any store and pay for their purchases in installments as a way to grow its customer base outside of e-commerce.
To offer on-demand access to installment payments, QuadPay’s app issues single-use digital cards that its customers then use to pay in-store. And behind the scenes, payments giant Stripe is powering the tech that enables instant card issuing and payment.
QuadPay’s on-demand cards will be issued through Stripe, a $36 billion payments fintech that does everything from core payments processing to fraud monitoring. Stripe works with almost all of the buy now, pay later players in some capacity, though not always through card issuing, Jeanne DeWitt Grosser, head of North America revenue and growth at Stripe, told Business Insider.
Stripe Issuing is a self-service card issuing application programming interface (API), and it just launched out of beta becoming available to all US businesses in April. QuadPay has been working with Stripe in beta for the card-issuing in its app, which launched in July last year.
For QuadPay, leveraging Stripe’s API-driven tech and international scale will help it grow and launch in new markets like Canada and the UK, Brad Lindenberg, CEO of QuadPay told Business Insider.
QuadPay’s 2018 seed round included funding from Global Founders Capital. The startup has not disclosed further fundraises, but Lindenberg says it’s well-capitalized.
“We have the capacity to scale the book far beyond where we are,” said Lindenberg. “We are sufficiently capitalized and maybe we’ll raise more as we grow, but we don’t necessarily have to at any point.”
Buy now, pay later startups like QuadPay initially gained traction by partnering with merchants and integrating into their e-commerce checkouts. When a shopper uses a buy now, pay later option, the merchant pays a fee (QuadPay’s fees range from 4 to 5.9%).
And it’s worth it for merchants, the startups say, because offering a buy now, pay later solution can help increase purchase size and convert browsers to buyers.
But it’s a crowded space, with players like Affirm, Afterpay, and Klarna also competing for merchant partnerships.
“It would take forever to sign up every brand,” said Lindenberg. “So the best solution to that was to build an app or technology that allows Quadpay to be used literally anywhere.”
When a shopper uses the QuadPay app in a store, the startup doesn’t earn a fee from the merchant for the sale. Instead, QuadPay earns a portion of the interchange fee for the card transaction, which it shares with the card issuer and payments processor Stripe.
For some partners, like QuadPay, Stripe will share the interchange revenue, DeWitt Grosser said. In other cases, for both smaller merchants and issuing partners that aren’t as focused on high transaction volumes, Stripe earns all the interchange for the issued card transactions, DeWitt Grosser added.
For merchants, the value proposition of a buy now, pay later product is an increase in sales. QuadPay says it increases merchant sales by up to 20%, and can increase repeat customer rates by up to 80%.
To be sure, having a larger QuadPay customer base could help the startup get more merchants onboard.
“We’re really focused on the customer, ensuring that they have a consistent experience, trying to provide them with as much spending power as possible within the bounds of our risk model,” said Lindenberg.
And beyond the app, QuadPay will look to become a key part of consumers’ shopping habits.
“The next phase of this is going to be around product discovery, brand discovery, and loyalty,” said Lindenberg.
On its connection, QuadPay lists merchants that accept QuadPay online. Other buy now, pay later players also provide partner merchant directories, and those leads help merchants generate more sales, Business Insider has reported.
And it’s not just buy now, pay later players looking at brand discovery. Commerce-enabling giant Shopify just launched a direct-to-consumer shopping app.
Stripe offers speed and international scale
When Stripe was developing its card-issuing product, speed and scale were the top two priorities, DeWitt Grosser said.
“We reduced the time it takes to do card issuance from two months to two days for a physical card or just a few clicks for a virtual one,” said DeWitt Grosser. “Any business can get started right away.”
And for fintechs, getting up and running quickly is key to keeping customers and staying competitive.
“In the case of QuadPay, their virtual card issuance has been core to their ability to spin all of these engagements up relatively quickly,” DeWitt Grosser said.
Stripe has long been known for its API-driven (meaning plug-and-play) tech, famously being founded on ‘seven lines of code.‘
Stripe also powers QuadPay’s payments acceptance for online purchases with its merchants. And for QuadPay, Stripe’s ease of use and international reach were compelling, Lindenberg said.
“We’re going to be rolling out in international markets this year,” said Lindenberg. “and having that capability in terms of infrastructure behind us on a single API set allows us to create these experiences at a global scale.”
Lindenberg said QuadPay will first look to launch in Canada and the UK.