Discover cards, one of the largest card providers in the US, has announced that it would be investing $30 million in the buy now, pay later startup called Sezzle which will help it to enter into the lucrative BNPL space.
The BNPL space has been growing in a very fast manner especially through the pandemic period as users become risk-averse and become careful about how much and how they spend their money. This has helped the BNPL industry in a great manner and we have been seeing even major companies like Apple and Paypal entering into this space putting a lot of pressure on startups that have already been working in this industry.
Charlie Youakim, CEO, Sezzle, said: “Discover’s capabilities via their network and financial products will enhance our own offerings and provide more paths to financially empower our consumers.”
As part of this investment, Sezzle would also help Discover to set up the BNPL product within its own global network as well as a referral program on the network for users of the Sezzle platform. The investment was done on a per-share price of $6.58 for approx 4.6 million total shares. Sezzle has over 2.4 million customers who use the BNPL service across 34,000 merchants that are present in the Sezzle network.
Recently, reports suggested that Apple and Goldman were tying up in a partnership that would help users to buy Apple products from the stores using a BNPL system with plans of rolling this out to other products, online and offline in the due course time. Likewise, we also have seen Paypal enter this space already in the US and parts of Europe with similar products, and the company also launched a fee-free BNPL scheme in Australia last week.
All this points to rapid and massive growth in the BNPL space and with digital payments expected to rule the roost in the payments industry in the coming years, more and more players, new and old, are entering into this space so that they can piggyback on this latest wave. The investors are also piling into the industry and there is likely to be some strong competition and mergers in this space in the coming months as the players in the industry jostle with one another to get a big share of the pie. Discover has also entered into this space with similar intentions and these are going to be exciting times for the users as increasing competition leads to better offers for the users.