Brits buy now and pay later companies: AppToPay, Butter and Curve

Swedish exit credit giant Klarna isn’t just a European startup valued at nearly $31 billion, it did, too.

Instead of prepaying for something with their debit card or making a large purchase on a credit card, increasing numbers of shoppers, especially younger ones, are opting instead for “Klarna”.

That might mean paying for the clothing store a month after you buy it, or spreading the cost over three or four weekly, monthly, or more installments with the promise of zero interest.

Although there is a small percentage of the online credit market, the buy-now-pay-later segment has been booming, and others want a piece of it, although it is controversial.

Household names like John Lewis, Marks & Spencer and Next have built or are in the process of building their own in-house postpaid schemes, while retailers both high street and online have partnered with the likes of Klarna, PayPal and Antipodean imports Clearpay and Laybuy and OpenPay.

And even if most providers packing checkouts are imports, there are several domestic versions that, even if you haven’t heard of, are hoping to take advantage of the checkout credit craze.

These are based in Doncaster AppToPayBased in London ghee And the curve, Which are based in Bristol and London.

How are these companies different and what are their unique selling points? This is the money take a look:

Butter: The ‘Original’ British Buy Now, Pay Later

Claiming to be the original British provider of BNPL, Butter, which comes with the tagline ‘spread the cost’, started life in 2017 as a service aimed primarily at commuters.

Founded four years ago by Timothy Davis, Nick Hockehl and Stefan Hubel, formerly called Pay Monthly Travel and then Sploor, it allowed borrowers to spread out the cost of flights.

It still offers this, along with holidays, with breaks to the likes of Berlin, Istanbul and Oslo marketed as being available for under £20 a month.

A return journey to Amsterdam from London Heathrow will cost £162.66 for 10 installments of £16.26 each.

However, with the coronavirus pandemic halting international flights on a large scale and online shopping booming, the company has changed tack.

In July 2020 it changed its name to Butter, and adopted the repayment annuity credit model it became known thanks to the likes of Klarna, raising £15.8m at the end of last month.

Although the name is relatively young and likely unknown, with assets of just £2.06m at the end of 2019 according to its most recent accounts, it has already struck deals with some big street names, including Argos, Asos and Currys PC World. And IKEA and Smyths toys and Zara.

Unlike some well-known BNPL providers, Butter cannot be used as a payment option at checkout at retailers. Instead, users must download a mobile app and make purchases through it.

It can be distributed in two, three or four installments, affordability checks are done beforehand with users having to provide their banking details through Open Banking and Credit Kudos reference agency.

It charges no interest but a late payment fee will charge borrowers £12.

AppToPay: a family business based in Doncaster

Founded in 2018 in Bawtry, a market town just south of Doncaster, AppToPay is a credit card and loan combo developed out of a family clothing store called Robinsons.

The concept, founder James Jones told This is Money, came from trying to sell “thoughtful purchases” like £1,000 Mulberry handbags to “people on fixed incomes who don’t have a lump sum” on hand.

After an affordability check, again conducted through Credit Kudos, borrowers will be assigned a credit limit of up to £2,000, same as a credit card.

However, all repayments are made on fixed monthly terms, ranging from 2 to 12 months, depending on how much the borrowers can repay each month.

AppToPay is also fairly transparent with the potential drawbacks of missed payments, detailing at the bottom of its website that missed payments are subject to a £12 fee and “all options other than direct payment carry a potential risk of credit score damage”.

The company is regulated by the Financial Conduct Authority and gives Section 75 credit card-style protections to borrowers, something that can be widely diffused in the buy now, pay later segment.

Commenting on the more explicit warnings on the site, Jones told This is Money that “people should be able to make an informed decision about what they buy, using AppToPay and commodities.”

The program is currently only in beta with Robinsons, with more than 6,000 applications over the past two years, according to Jones, though not all applications have been accepted because the trial is “being funded off our back.”

Although it is app-based, it is only available on in-store purchases, after which the app is downloaded and the purchase is made through that, a process that takes “about 25 seconds”.

He added, “We are progressing rapidly in talks with a number of potential investors and strategic partners to allow us to expand our offering to consumers,” but said he was unable to disclose further details at this time.

Curve Credit: The newest card in the wallet

Curve was launched in 2016 and has become known as “the card that allows you to use multiple cards at once”.

At some point, for a while, it became a way for people to use American Express cards at locations that didn’t accept Amex.

Since then, it has expanded its product range, offering premium and metal cards with a monthly fee and additional perks, and enabling people to return purchases in order to purchase them with a different card.

Now, to bolster its pay-later position, it’s piloting “Curve Credit,” which will allow “customers to split any transaction into installments with a single click.”

Currently prospects can only join a waitlist, which doesn’t require them to be a Curve customer.

Details remain somewhat thin on the ground, but according to Techcrunch, borrowers either owe money to Curve after making a purchase on the card, or to a different lender in a market-style model.

The app-based card provider had 2 million customers at the start of this year, though there is an ongoing debate about how many users use these cards regularly.