It was once impossible to buy something outside of your budget, especially if no layaway offers were at hand allowing customers to slowly pay off a purchase and pick up the item when payments were complete. Now, long gone are the days of waiting to receive an item as you pay it off. Instead, the latest “buy now, pay later” craze is touching almost every retail sector you can imagine and it can be done right from your phone.
Startups like AfterPay, Klarna and QuadPay are some of the biggest names in the buy now, pay later space. These brands, and many others, offer customers the opportunity to buy almost anything, receive it immediately and pay for it later in installments of four or six.
New York-Based ChargeAfter is the latest buy now, pay later startup to rake in venture capital. On Tuesday, it raised a $44 million Series B round led by The Phoenix. This latest round is nearly 6x the sum of its Series A raise back in 2019.
The startup’s raise is a testament to experts believing investments in buy now, pay later companies will continue. After all, research reports startup’s in the sector raised $1.5 billion in venture capital in 2020 — a 42 percent increase from 2019.
“While buy now, pay later has exploded in popularity in recent years, the marketplace often gives consumers limited options and up to a 70 percent decline rate,” Meidad Sharon, ChargeAfter CEO and founder, said in a statement. “Investor interest in ChargeAfter is a testament to the growing need for a network-driven financing platform made for merchants, banks and financial institutions.”
Sharon told Built In over email that drivers of the platform’s success are younger demographics that typically don’t own credit cards and consumers who want easy access to credit at the point of sale.
“Unlike credit cards, which take time for approval and to receive a card, BNPL [buy now, pay later] is immediate and happens when and where consumers need it. This helps merchants as it results in more completed purchases and less cart abandonment,” Sharon said.
Unlike competitors in the space, ChargeAfter seems to offer higher financing amounts. Its website boasts approval of spending upwards of $100,000, while AfterPay limits customers to a maximum of $2,000.
Sharon said ChargeAfter can offer this differentiating factor because it doesn’t approve financing options; the financial institutions that it partners with does. Because of that, multiple financing options at various rates can be offered to customers.
“As consumer interest in but now, pay later accelerates, it is critical for merchants, banks and financial institutions to offer tailored solutions that meet their customer’s evolving needs,” Boaz Morris, investment manager at The Phoenix, said in a statement. “ChargeAfter’s white-labeled, multi-lender platform represents the next generation in consumer lending and enables any business to seamlessly embed diverse credit solutions in their product offering.”
ChargeAfter plans to use its fresh funding to partner with new retailers and bank lenders and hire new talent.
