Buy now Pay later is even better

UK financial technology company Monzo has launched a new product that plans to tackle the growing Buy Now, Pay Later (BNPL) market by introducing zero interest loans on qualifying purchases.

Monzo Flex, the name of the new BNPL feature introduced by the company, will allow users to get finance on purchases of up to £ 3,000, either by paying three equally large installments with 0% or 6% interest. at 12 installments at an annual percentage of 19%. rate (APR).

The minimum ticket size for a purchase to be eligible for Monzo Flex would be £ 30 and it can be applied retroactively to purchases made up to two weeks ago.

“Flex combines Monzo’s technology and banking expertise with its core values, ensuring that customers always have visibility and control over their financial lives and only borrow money they can afford to pay back.” said Kunal Malani, head of Monzo loans.

Getting approved for a flex loan is easy. Users only need to complete the application process in the Monzo app. Thanks to artificial intelligence and algorithms, Monzo will be able to make a decision about the application almost instantly.

Once the loan is approved, a credit limit will be set and the user can apply it in whole or in part after the purchase is made. The first installment of the loan will be deducted at the end of the transaction while the remaining payments will be collected as agreed.

It is important to note that the 19% APR offered by Monzo Flex at the moment is variable, which means it can fluctuate with UK interest rates.

Monzo Flex – A £ 38 billion opportunity

The introduction of Flex allows Monzo to tap into the growing BNPL market. This segment of the lending industry is expected to grow from $ 5.8 billion (£ 4.24 billion) in 2020 to $ 35.3 billion (£ 25.8 billion) by the end of 2028, according to data from

That said, Monzo will likely face stiff competition from well-established digital payments and fintech companies in the country, including PayPal, Klarna, Clearpay, and Laybuy.

According to the company’s 2020 annual report, Monzo increased its user base by 23% to 5 million customers at the end of last year. By comparison, Klarna reported a total of 752,000 monthly active users (MAUs) on its iOS app alone.

However, the company saw a drop in its gross lending figures last year as the pandemic affected its operations, although the company’s revenue fell from £ 67million to £ 79million. Of that £ 23.95million, it was interest income for Monzo.

Going forward, it would be plausible that the company’s results would be positively affected by the launch of Monzo Flex, as this product offering would further diversify the company’s lending business.

What could happen next for Monzo?

There has been a lot of talk about a potential initial public offering (IPO) for Monzo lately amid the rise of fintech companies and ‘challenger banks’ in the UK.

However, the company’s chief executive, TS Anil, clarified that such a step could be considered by 2023 and not before.

Going forward, Monzo could exploit other opportunities in the rapidly evolving fintech industry, including offering cryptocurrency trading services and a crypto wallet.

On this particular front, the company doesn’t seem to like the Bitcoin (BTC) boom too much, as its general counsel, Stephanie Pagni, viewed cryptocurrency as a fad despite the fact that many of its competitors have already introduced related services. to crypto.

About Alejandro Arrieche PRO INVESTOR

Alejandro is an independent financial analyst with 7 years of industry experience. He writes technical content on economics, finance, investments and real estate and has also helped financial companies develop their digital marketing strategy. His favorite subjects are value investing, macro analysis and technical analysis. Other publications Alejandro has written for include The Modest Wallet and

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