The British buy now, pay later firms: AppToPay, Butter and Curve

Swedish checkout credit colossus Klarna is not just Europe’s most valuable start-up at an estimated $31billion, it’s a verb too.

Rather than pay for something upfront using their debit card or put a big purchase on a credit card, increasing numbers of shoppers, especially younger ones, instead choose to ‘Klarna’ it.

That can mean paying for their clothes shop a month after they have purchased it, or spreading the cost over three, four or more weekly or monthly instalments with the promise of no interest.

Buy now, pay later platforms have signed up millions of users with offers of interest-free checkout credit

Although a small percentage of the online credit market, the buy now, pay later sector has been booming, and others wants a slice of it, however controversial it has proven to be.

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

And even if most of the providers which populate checkouts are imports, there are several home-grown versions which, even if you haven’t heard of them, are hoping to cash in on the checkout credit craze.

These are Doncaster-based AppToPay, London-based Butter and Curve, which is based in Bristol and London. 

How do these firms differ and what are there unique selling points? This is Money takes a look: 

Butter: The ‘original’ British buy now, pay later provider

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

Founded by Timothy Davis, Nik Haukohl and Stefan Hobl four years ago, the company was previously called Pay Monthly Travel and then Sploor, and allowed borrowers to spread 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 flight to Amsterdam from London Heathrow would cost £162.66 return, paid back over 10 instalments of £16.26 each.

Butter began life as a company called Pay Monthly Travel, and still lets borrowers spread the cost of flights over monthly instalments

Butter co-founder and chief executive Timothy Davis

However, with the coronavirus pandemic leading to a widespread grounding of international flights and a boom in online shopping, the company changed tack.

In July 2020, it changed its name to Butter, embraced the instalment checkout credit model which has become well-known thanks to the likes of Klarna, and raised £15.8million at the end of last month.

Although a relatively small and likely unknown name, with assets of just £2.06million at the end of 2019 per its latest accounts, it has already struck deals with some big high street names, including Argos, Asos, Currys PC World, IKEA, Smyths Toys and Zara.

Unlike some better-known BNPL providers, however, Butter cannot be used as a payment option on retailers’ checkouts. Instead, users must download a mobile app and make purchases through there.

They can be spread over two, three or four instalments, and affordability checks are carried out beforehand with users having to provide their bank details through open banking and the reference agency Credit Kudos.

It charges no interest but late payment fees will see borrowers charged £12.

It has now pivoted into offering interest-free credit to shoppers in partnership with retailers like IKEA and Zara

AppToPay: The Doncaster-based family business

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

The concept, founder James Jones told This is Money, came from trying to sell ‘considered purchases’ like £1,000 Mulberry handbags ‘for people with steady incomes who don’t have a lump sum’ to hand.

After an affordability check, again carried out through Credit Kudos, borrowers would be allocated a credit limit of up to £2,000, like a credit card. 

AppToPay founder James Jones

AppToPay was launched after the experience of James Jones’s family business, clothing shop Robinsons, in Yorkshire

However, all repayments are done on fixed monthly terms, of between two and 12 months, depending on how much borrowers can afford to pay back each month.

AppToPay is also fairly transparent with the potential drawbacks of missing payments, detailing at the bottom of its website that missed payments are subject to a £12 fee and ‘all options other than an outright payment have a potential risk of damage to a credit score’.

AppToPay works as a hybrid between a credit card and a loan

The company is regulated by the Financial Conduct Authority, and also bestows Section 75 credit card-style protections on borrowers, something This is Money reported could be more widely rolled out to the buy now, pay later sector.

Commenting on the more overt warnings on the site, Jones told This is Money ‘people should be able to make an informed decision about what they’re purchasing, both with AppToPay and the goods’.

The scheme is currently in a trial stage solely with Robinsons, with over 6,000 applications over the last two years, according to Jones, although not all are accepted as the trial is being ‘funded off our own back’.

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

He added: ‘we’re in rapidly progressing 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 more details at the moment.

Curve credit: The latest card in the wallet

Curve launched in 2016 and has become best-known as the ‘card which lets you use multiple cards at once’. 

At one point, briefly, it even became a way for people to use American Express cards in spots which otherwise did not accept Amex.

Since then it has broadened its product range, offering premium and metal cards with monthly fees and extra perks, and enabling people to rewind purchases in order to purchase them with a different card.

Curve lets users load multiple cards onto one app and choose which one to sync with a physical card

It is now trialling Curve Credit, which will let people pay back purchasers in instalments

Now, in order to muscle in on the pay later scene, it is trialling ‘Curve Credit’, which will allow ‘customers to split any transaction into instalments with a single tap’. 

Prospective customers can currently only join a waitlist, which does not require them to be a Curve customer.

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

The app-based card provider had 2million customers at the start of this year, although there has been persistent controversy over how many of them use those cards regularly.

This post first appeared on Dailymail.co.uk