Pay-later platform, Simpl, has secured an asset-backed facility from Franklin Templeton, Finuvo LLC and Catalina Finance to support up to $1 billion of buy now, pay later (BNPL) volume.
With an acceleration in e-commerce and digital payments, small-ticket 'buy now, pay later' (BNPL) loans are gaining popularity, driven by new-to-credit customers.
Simpl offers payment solutions to consumers who are either new to credit services or aren’t in need of large loans through its mobile platform with a one-click checkout feature.
The BNPL market, which is between $3 billion and $3.5 billion currently, is projected to hit around $45 billion to $50 billion by 2026, according to research firm Redseer. The number of BNPL users in the country, meanwhile, are projected to go up from 10-15 million to 80-100 million by then.
Simpl has just over 7 million users, while in the last 12 months its merchant base grew by 10X to 10,000 online retailers, which include leading e-commerce platforms such as Jio, Zomato, BigBasket and MakeMyTrip.
The company is seeing growth in user-base and payment volumes, fuelled by the rise of e-commerce and consumers’ demand for safe, easy and cashless payment options.
“We believe that our moat is extremely deep, consisting of not only the merchant side integrations and proprietary data, but also our model's performance over time and the learnings obtained by utilising them, which create immense barriers to entry for new participants,” said the company’s founder and CEO Nitya Sharma.
“We are seeing tremendous opportunity to grow with our core consumer population of urban millennials for many years to come. Despite about 800 million people in the country owning a bank account with almost all of them owning a debit card, 60% of all e-commerce transactions are still done using cash. Paying at the time of delivery builds trust in the transaction and cash on delivery is a true 1-click checkout and this is what BNPL services like ours is trying to offer,” Sharma said.
A company release said the capital infusion, “will allow Simpl to accelerate the growth of its existing businesses.” Simpl will double its engineering, product, data science and sales teams to work on a suite of new merchant and consumer-facing products, it said.
Simpl’s credit models are based on machine learning algorithms. “Machine learning is an indispensable part of Simpl as all of our credit decisioning is done by machine intelligence with no human involvement at all,” the CEO explained.
"Simpl delivers a transaction success rate of 99% to online retailers as opposed to the industry average where payment failures are around 20-30%,” she added.
Sharma said Simpl has seen more acceptance since the pandemic broke out, “bringing blue-chip balance sheet partners on board will allow us to scale the business quickly and efficiently.”
One of the investors in the deal, Finuvo, said it found Simpl’s business model, short-duration receivables, and its underwriting mechanism attractive.