A Simpl Explanation

Simpl CEO Nitya Sharma shared the virtual stage with PayPal’s Greg Lisiewski at the Wolfe FinTech Forum on March 8, 2022, to discuss the latest in global Buy Now, Pay Later (BNPL) trends. Given that Simpl’s approach is very different from other well-known BNPL players globally, due to the unique characteristics of the Indian market, we paraphrase the key insights from our notes in the following.

Simpl

Simple is a one click checkout network for any digital surface. A consumer can press a button that says “Simple” without paying instantly for what they are buying. Simple then consolidates all their transactions over a period of 15 days into one bill, which the consumers pay once every 15 days. So Simpl behaves very much like a credit card that is paid off with the current statement.

India E-Commerce

While India is one of the fastest-growing e-commerce markets in the world, the user experience on checkout is completely broken. Consumers have to deal with multiple passwords, multiple clicks, and a large number of payment carriers at the point of checkout.

Additionally, 70% of people who buy online still pay with COD, which means you buy from Amazon, and you will pay with cash at the point of delivery. And one of the biggest drivers of cash is trust. What Simple provides in this whole equation is a great user experience and a feeling of trust between merchants and consumers to increase conversions and replace cash.

The Merchant Side of BNPL

BNPL is obviously very enticing for the consumer, but for the merchant it is even more interesting, because it actually increases the merchants’ ability to sell online and increases their conversions.

With Simple, we got inspired by something that has been used in India centuries, which is called a Khata, which is nothing but a tab or a house account that you open with a friendly neighborhood store.

This Khata allows the store to build an independent, trusted relationship with their customer. Every merchant in the world, online or offline, wants to build an independent, trusted relationship with their customer. We think payments have really underserved merchants, whether online or offline. We believe BNPL has that disruptive potential to truly build a new layer of payments that are much simpler.

Why Simpl

I was moving back to India around 2015 and got rejected for a credit card for a simple reason that in India I did not have a credit score. But then only 3.5% of the addressable market in India has a credit card. Very few people in developing markets have credit cards.

Secondly, e-commerce and digital services more broadly are obviously increasing at a blistering pace, but as mentioned above, most people still use cash purely because of trust. This made me feel there must be an opportunity to reimagine the credit card.

So imagine a world where there is no credit card, but we are transported into today’s world, with today’s technology, today’s e-commerce merchant and today’s consumer — how would you reimagine a credit card?

For me, it was clearly a new version of something like a Visa network that is merchant-first, something that really empowers the merchants to be consumer centric, online or offline.

As I was using the Khata myself, the obvious question was whether we could just put the Khata up on the internet so that consumers and merchants can transact online intuitively with one click. For that to work, we obviously had to solve the problem around fraud and risk on the internet.

If you were to connect all these Khatas on a common network like Simple so that the network owns the identity layer and the risk layer, then you can truly scale it to allow consumers to buy at multiple places and pay one consolidated bill, and offer merchants a way to build trusted relationships with their customers.

Usage

An average customer uses Simple six times a month. Our top quartile users use Simple about 15 times a month.

The use cases Simpl is known for are buying food on Zomato, for example, which is the Door Dash of India. Or Instacart purchases, or even digital goods in video games.

We also now offer installments. So if you are buying food, you can put it on the tab and pay it off in the next cycle. If you are buying higher value items, you can split it into three equal payments as well.

Fraud & Risk Management

Fraud management is probably the most important IP to scale this business. I think BNPL is much better position to underwrite both fraud and risk compared to credit cards. The competitive advantage that BNPL has is the integrated framework at the point of sale, rather than the complex legacy payments stack. Hence you can connect the entire data flow between the merchant and consumer at the SKU level, giving BNPL a much superior capability to manage risk and fraud using new data that credit cards just do not have.

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