Unplugged Q&A: PayJustNow CEO on Retail Revolution

In an exclusive interview with Craig Newborn, the visionary CEO of PayJustNow, we delve into the dynamic landscape of the Buy Now Pay Later (BNPL) market and the transformative role his company plays within it.

As a pioneering force in the financial technology sector, Newborn has led PayJustNow to remarkable achievements, navigating through the evolving demands of both consumers and retailers.

With insights into the burgeoning success of PayJustNow, Newborn shares his perspectives on the BNPL industry, the company’s unique offerings, and the future trends that shape the Retail experiences of South Africans.

1. How has the Buy Now Pay Later (BNPL) model evolved in the retail industry, and what prompted its surge in popularity?

The BNPL market is experiencing significant growth, with PayJustNow observing a monthly sign-up rate ranging from 40,000 to 60,000 consumers. In 2023 alone, the retailer base’s Gross Merchandise Value (GMV) has more than doubled, and over a million South Africans have registered by August 2023. The surge in popularity is attributed to the initial lack of access to cash-flow-friendly financial products with reasonable interest rates and fees. Since its 2019 launch, PayJustNow has attracted financially savvy consumers who use the service as a budgeting tool for acquiring higher-ticket aspirational items, allowing them to spread costs over three interest and fee-free months. Retailers benefit by avoiding on-site stockholding, reaching new audiences, and enjoying higher average spending per customer.

2. Can you highlight some key benefits of adopting the BNPL model for retailers in today’s market?

The retail market today is extremely competitive, and retailers are looking for more ways to adapt to their customer’s needs amidst rising interest rates and a tighter credit market.

BNPL offers the following benefits:

• Increases brand exposure and helps them reach a new audience of consumers who want to use BNPL to make their purchases.
• Builds customer loyalty and drives more sales.
• Results in higher average spend per customer.
• Improves cash flow. PayJustNow accepts the risk, while retailers are paid in full immediately.

Consumers are increasingly shopping for promotions and discounts. PayJustNow’s Deals offering benefits merchants by allowing them to specifically target consumer segments with relevant deals.

3. What challenges might retailers face when integrating BNPL services, and how can these challenges be addressed?

• Integration with existing systems:
  • Challenge: Integrating BNPL options into current point-of-sale systems, online platforms, and accounting software can be technically challenging.
  • Solution: PayJustNow leverages APIs and pre-built integrations with POS and eCommerce platforms which can simplify this process.

• Customer credit risk:
  • Challenge: offering BNPL can expose retailers to credit risk if customers default on payments.
  • Solution: PayJustNow assumes the credit risk itself. Retailers should choose providers with robust credit assessment mechanisms to minimize default rates.

• Costs and fees:
  • Challenge: BNPL services can come with additional costs and transaction fees for the retailer.
  • Solution: retailers should carefully evaluate the fee structures of different BNPL providers and consider the potential increase in sales volume. One needs to consider the approval rate (PayJustNow 75%) which leads to increased conversions and not just costs.

• Training and customer service:
  • Challenge: staff may need training on the BNPL process, and there might be an increase in customer service inquiries related to BNPL transactions.
  • Solution: PayJustNow invests in staff training with a customer satisfaction score of 4.7/5 on Google.

4. In what ways does PayJustNow differentiate itself from other BNPL providers, and what unique advantages does it offer to retailers?

• PayJustNow is a South African company with local insights and the ability to engage directly with our customers. When you call us, a human will answer.
• Unlike some of our competitors, we offer BNPL as a payment option for online and in-store customers who prefer to see, touch, and feel the products they want to purchase.
• Most BNPL models use a US-based model, which has a two-week payment cycle. PayJustNow aligns to the typical South African monthly salary cycle over 3 months.
• PayJustNow is fast becoming a one-stop shopping platform where consumers can find the best deals and promotions from their favorite brands via our unique Deals page.

5. How can smaller retailers leverage the BNPL model to compete with larger players in the market?

There are numerous BNPL providers in the market, so the key for small retailers is to choose a BNPL partner whose model aligns with their customers’ needs. Here are three tips that smaller retailers can leverage to maximize their growth through BNPL:

1. Avoid offering BNPL on consumables:
The essence of BNPL lies in allowing users to plan their more significant purchases. Items like load-shedding backups and winter essentials, such as gas heaters, become more affordable when the cost is spread over three months. Offering BNPL for consumables like groceries, takeaways, or fuel means customers are essentially spreading the cost of something they use today over three months, adding pressure instead of reducing it. By planning larger purchases around BNPL and ensuring successful installment collections, customers benefit from a growing credit facility aligned with their affordability.

2. Consider your average customer’s payment cycle:
Not all BNPL providers are the same. Look for a provider that aligns with your audience’s general salary cycle. While many providers follow a US-based model with a two-weekly payment cycle, South African BNPL providers like PayJustNow match a monthly salary cycle. Choose a provider that meets your customers’ cash flow requirements.

3. Your provider as an extension of your brand:
When selecting a BNPL provider for your business, opt for one that is easy to engage with and has an active customer and merchant service department willing to assist if customers need to change their installment date or have an inquiry. The provider you choose becomes an extension of your brand, so ensuring your customers have a valuable experience when purchasing your products is crucial.

6. Security is a concern for both retailers and consumers. How does PayJustNow ensure a secure and trustworthy BNPL experience?

Shopping with PayJustNow BNPL is now much safer due to the successful introduction of selfie verification in 2022. This feature, integrated into the PayJustNow app, enables users to proactively confirm their identity with Home Affairs before purchasing, significantly reducing the risk of fraudsters accessing personal information.

Moreover, PayJustNow maintains PCI DSS compliance and undergoes verification by independent security auditors. This ensures that both merchants and payment processors meet advanced security standards for handling customer data during transactions. Protective measures include storing payment processor information and utilizing encryption, masking, hashing, and truncation.

7. What strategies can retailers implement to effectively market and communicate the BNPL option to their customers?

Effectively marketing and communicating the BNPL option to customers is crucial for its successful adoption.

• Prominent display at checkout:
• Ensure that BNPL is prominently displayed during the checkout process.
• Educational content:
• Create dedicated sections on the website or within product pages to explain how BNPL works. Provide clear information about fees, and repayment schedules.
• Email marketing & social media:
• Leverage email marketing campaigns to inform existing customers about the availability of BNPL.
• Partnerships and collaborations:
• Joint marketing efforts in collaboration with PJN.
• In-store promotion (if applicable):
• If the retailer has physical stores, ensure that PJN information is visible in-store. Train staff to educate customers about the option and answer any questions they may have
• Introduce limited-time promotions or discounts for customers who choose PJN. This can incentivize them to try the option and experience its benefits.

By combining these strategies, retailers can effectively market and communicate the BNPL option, making it more accessible and appealing to a broader customer base.

8. How does the BNPL model contribute to increased customer loyalty and repeat business for retailers?

Our customer base has an 80% repeat customer rate, indicating that consumers appreciate and wish to persist in using BNPL. South Africans are gradually shifting away from interest-bearing credit toward more responsible and risk-free credit alternatives. For consumers with limited credit histories, BNPL assists them in safely constructing a credit profile.

9. Are there specific industries or types of products where the BNPL model tends to be more successful, and why?

BNPL is particularly successful across the more aspirational sectors of the industry, from high-end local retailers to big brand names. Products like fashion, footwear, and electronics have been consistently popular, while we are now seeing a move towards the home and Automobile/Motor product categories.

10. Looking ahead, what trends or innovations do you foresee in the BNPL space, and how can retailers stay ahead of the curve?

The shift in spending behavior indicates a growing preference for improved payment methods and a heightened interest in promotions and discounts. In 2024, the rapid surge in online shopping driven by the pandemic is expected to decelerate. The emphasis will shift to enhancing the in-store experience, urging retailers to provide compelling reasons for customers to shop in person, and prioritizing convenience and service. The demand for Buy Now Pay Later (BNPL) is projected to persist across various industries, prompting retailers to carefully consider options and select a BNPL partner aligned with their customers’ preferences.