A brief review of 'Buy Now, Pay Later' model.

• Author: Nisar, Ahsan

Byline: Ahsan Nisar

Pakistan used to be one of the most often overlooked countries when it comes to fintech investments but now it is one of the countries with the most potential. The world's fifth-most populous nation is seeing record money flow into its startups with more than $305 million this year, higher than the past six years combined. Similarly, 'Buy Now, Pay Later' (BNPL) model is also heating up around the globe since the start of the year. Following the hype and the scale witnessed globally, local startups have also started coming up with their own BNPL offerings. That includes QisstPay from Islamabad and KalPay of Lahore, whereas Finpro and KistPay brand themselves as smartphone financing solutions.

QisstPay has raised $15 million in early stage investment, ahead of expanding to Sri Lanka and Bangladesh. MSA Capital led the round with participation including from Global Founders Capital, Fox Ventures and First Check Ventures. The Islamabad-based company wants to enter other South Asian markets within six months. The company serves retailers including the local units of Samsung Electronics Co. and Xiaomi Corp. and plans to have 1,000 merchants by next month and a million customers by next year using its service. QisstPay's investors include strategic angel investments from Simone Mancini and Johnny Mitrevski, founders of Scalapay, and Pakistan's third-largest lender United Bank Ltd.

There is a slight difference in the "credit card" and BNPL model. Credit cards work on an interest rate model where the customer pays for a certain good at any place that accepts cards and pays within a defined time frame to avoid any fees. But once the grace period is breached, markup starts accumulating, and that's how the financial institutions basically earn their profits. BNPL companies, on the other hand, onboard individual merchants, allowing them to offer their customers the option to extend the payments over a specific period. The most common model is Pay in 4, which essentially spreads out the amount into four equal installments. QisstPay does Pay in 4 (months) but is absolutely free - not even late payments - to the end customer allowing order sizes ranging from Rs1,500-50,000...