We’ve written extensively about buy now, pay later [BNPL]. This branch of the payments ecosystem lets consumers (and businesses) take immediate possession of goods and then pay them off over time. It’s become an incredibly popular way to buy stuff. And don’t we love stuff?
Over time, BNPL has expanded from ordinary consumer goods (think shoes and electronics) to things like groceries, gasoline, and college textbooks. PlusB2B, health care, and more. And, of course, travel. After all, who wouldn’t at least be tempted to fly to Bali on a plane ticket for which you paid one-quarter upfront and worry about the rest post suntan via installments you have to pay over a period of weeks?
Recently, another new way to pay called save now, buy later [SNBL] has emerged. It’s essentially the opposite of BNPL. And it really isn’t new. SNBL is just good old-fashioned layaway. But in digital form.
Immediate vs Delayed
The real difference between BNPL and SNBL is in the timing of gratification.
BNPL releases those immediate gratification endorphins. I can go to Bali now.
SBNL makes you wait until you pay for the trip. Dads must love SNBL as much as they must hate BNPL. Ask Dave Ramsey. America’s grumpy dad dispensing unheeded financial advice to his dumb grown kids (e.g., all of us) thinks BNPL is a tool for keeping young people broke.
An announcement this week suggests SNBL is making inroads in travel, a sector where BNPL has been thriving. You’re still thinking about Bali, aren’t you?
Accrue Savings, a U.S.-based SNBL platform, has formed a deal with the online travel agency CheapOair (now there’s a brand promise for you) to allow consumers to save up for travel via Accrue’s SNBL solution.
BNPL, which has been courting unwanted regulatory attention of late, has many faces. Compelling founders like Nick Molnar (Afterpay), Max Levchin (Affirm), and Sebastian Siemiatkowski (Klarna), have provided BNPL with friendly, reasonable faces for the CNBC cameras.
Now SNBL has its own face. Michael Hershfield is Accrue Savings’ Founder and CEO. The former WeWork executive launched Accrue in 2021 to provide a more genuinely consumer-friendly alternative to BNPL, which by then was already massively popular, helped along by a pandemic-driven eCommerce boom.
We asked Hershfield to tell us a little more about the deal with CheapOair, which according to the press release, allows consumers to plan ahead and save for trips, even earning opportunities for rewards along the way.
And to do so without getting into debt, which Accrue says 20% of American consumers do in the course of taking vacations.
“One hundred-plus million Americans are actively saving for travel, this is a huge untapped audience of future travelers,” Hershfield told Localogy Insider. “Additionally, as we see from our data, many Americans are struggling with credit, and are seeking other ways to get what they love. Brands responding to this growing consumer pain will win and build loyalty with their customers.”
Hershfield and Accrue have been tough on BNPL in the past. The company even published a recent blog post with the title, “How Accrue Savings Disrupted BNPL”.
The truth is, it’s difficult not to be critical of that which your business exists to be measured against. Still, Hersfield avoided bashing BNPL directly in the remarks he shared with us.
The real enemy is credit. Hershfield does emphasize that SNBL promotes “financial wellness.” Something that critics like Ramsey and Australian consumer regulators no longer credit buy now, pay later with doing. In fact, Australia has begun regulating BNPL as a credit product.
The Euphemism Bandwagon
Hershfield even seems to jump on a euphemism bandwagon that we recently detected in the BNPL space. BNPL platforms have started using terms like “alternative payments” in lieu of “buy now, pay later.” We assumed this was to create a new language that obscures the growing controversies surrounding BNPL.
Hershfield offers his own euphemism. Payment diversity. Not bad. Hard to be against that.
“Our partnership with CheapOair marks a significant step forward in our mission to partner with innovative brands to spread payment diversity to Americans,” he said.
“With this partnership, we aim to empower consumers with smarter travel options that align with their needs and promote long-term financial wellness. There are many options for consumers to purchase their travel. BNPL and credit cards have become the primary ones. We are complementary and provide an additional path for Americans. An important and untapped one.”
This deal is an important moment for SNBL. Aside from fundraising, which is tough across the board right now, partnerships are a critical guidepost for measuring progress in the “payment diversity” space. Well, that and consumer adoption of course.
Maybe Accrue should reach out to Ramsey about making an ad.
