Buy now, pay later has been as controversial as it has been revolutionary. The payments model lets consumers take delivery of goods and services immediately while they pay off the purchase in equal installments. This usually occurs over three or four equal installments, often at zero interest.
Younger consumers, particularly GenZs, have embraced BNPL. This youthful bent has likely fueled the now widespread criticism that BNPL makes it too easy for consumers to make large purchases they can’t afford.
Regulators are swooping in to blunt what they often see as a negative force in the consumer economy.
For example, The US, Australia (ground zero for the BNPL industry), and the UK, among others, have active efforts underway to shine a brighter light of scrutiny on BNPL for contributing to a rise in consumer indebtedness.
As consumer BNPL comes under greater scrutiny (while continuing got grow), BNPL companies are pivoting to verticals and B2B to plow new fields and, perhaps, avoid the gaze of regulators. At least for a while.
And BNPL hasn’t been spared the impact of the bloodletting imposed on fast-growing tech companies earlier this year. Leading players like Klarna and Affirm saw their valuations and market caps (respectively) decimated as investors tired of the growth-at-all-costs ethos that permeated tech during the era of cheap money that preceded the inflation and interest rate hikes that are now the norm.
Fintech Downturn Costs Klarna $16 Billion
Investors Respond
Investors seem to be responding positively to this shift in the use of BNPL. PayZen, a company that applies BNPL to healthcare, for example, has just raised $20 million to continue pursuing this model.
PayZen Wants to Bring ‘CNPL’ to Health Care
We first write about PayZen back in November 2021. At that point, BNPL had been moving into verticals and B2B for a while in the face of growing competition and regulatory scrutiny. At that time, we reported that PayZen had raised a $15 million Series A round. The San Francisco company, founded in 2019, uses the term “Care Now, Pay Later” to describe its service.
The new $20 million round was reportedly led by 7wireVentures and brings the company’s total equity raised to $40 million since its founding. 7wireVentures also participated in PayZen’s Series A.
As we wrote last year, PayZen saw an opportunity to use BNPL to ease a real consumer pain point. Medical debt. Here is what we wrote last year.
According to PayZen, U.S. medical debt stands at $300 billion. And cost concerns lead almost one out of three Americans to defer receiving medical care. PayZen was founded in 2019 to develop health care payment options that will allow more people to access care. We presume this is the “mission-driven” part. PayZen says it uses AI to help health care providers to get a more accurate gauge of a patient’s ability to pay.
The company plans to use the new money to extend credit to more people.
PayZen claims that the hospitals using its technology have increased patients’ access to healthcare. While at the same time improving patient collections by from 30% to more than 50%.
