Buy-Now-Pay-Later’s reputation is on the line…and ‘cool’ influencers aren’t the answer

Nicole Louis

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Barclaycard launched a new TV campaign last week which mocks ‘cool’ Buy-Now-Pay-Later (BNPL) players like Klarna. Partnering with pop queen Grace Jones, the campaign tagline reads “Why does everything have to be cool these days?”

And you probably know exactly what they’re talking about. Klarna has enlisted a slew of celebrities including Snoop Dogg and A$AP Rocky to promote its BNPL service. It’s a marketing strategy that’s helped Klarna become the most famous BNPL brand around. As the space heats up and consumer awareness builds, great PR and marketing has been essential for providers with near-identical offerings to differentiate.

It’s clear that Barclaycard is positioning itself as the safer BNPL option; as a traditional player that consumers know and trust. In the ad, Grace insists she doesn’t want her payment solution to be cool, but rather offer protection and help build her credit score. And with regulated banks like Monzo and big names like MasterCard entering the race, we can expect to see this tactic grow.

It’s a well-timed campaign.

Unregulated BNPL schemes were coming under fire again last week, with reports of UK consumers racking up to £4bn in debt so far this year. It’s clear that BNPL players like Klarna and AfterPay are facing a much bigger PR problem: how to win over the regulators. The challenge now is proving they can protect customers and ensure risks are communicated clearly. This is most likely a key reason behind Klarna’s launch of a Pay Now feature last week that encourages users to pay in full immediately if they can.

The BNPL market has a long way to go to shirk its unwanted image as, what Labour MP Stella Creasy calls the “next Wonga waiting to happen.”  Established and trusted brands like Barclaycard and MasterCard joining the race have a head start. What they lack in ‘cool’, they certainly make up for in inherent confidence among both consumers and regulators.

As the saying goes, trust takes years to build and seconds to break.

How can BNPL players boost credibility?

It’s about acknowledging the risks and taking responsibility. There have been oversights and failings in how unregulated BNPL services have been marketed to consumers. Clearly stating the risks is an obvious first step to get the Financial Conduct Authority (FCA) on side well ahead of expected regulation in the next few years.

Brands must build confidence for the industry. It’s the responsibility of ALL players, from Klarna and Barclaycard to Openpay and AfterPay, to encourage healthy spending and to strive for more transparency across the board. After all, the reputation – and therefore success – of the BNPL industry is in the balance.