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Thinking beyond BNPL: How some startups are evolving their models around \'SNPL\'
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A new generation of startups is turning the concept of ‘buy now pay later,’ or BNPL, on its head. Fintechs such as Multipl, Hubble and Tortoise operate on the ‘save now pay later,’ or SNPL, model in which users save money with merchants and benefit from the discounts that come with advance payments. 

All three platforms, Multipl, Hubble and Tortoise have raised funding. On 12 May, Multipl announced a round of funding from Kotak Securities and others. 

Here’s how it works 

Let’s say you want to buy an iPhone. The phone costs Rs 1 lakh and you can set aside Rs 10,000 per month over 10 months for it. There are multiple ways in which you can buy the phone.

First, you can buy it now using a credit card or avail a BNPL loan and repay the lender in 10 instalments (EMIs). Second, you can put the money in a bank FD or debt mutual fund and buy it when your savings reach ₹1 lakh (helped by interest). 

However, there is a third option. In this option, your instalments go to the merchant as advances or they sit in an escrow account with a third party designated for a specific product from a specific merchant (for example, an iPhone). In return the merchant gives you a discount. If you factor in the merchant discount, your ‘return’ on savings is a lot higher than just keeping aside money in the bank. 

“Our users for iPhones plan will get a cashback of 10%. We partnered with Imagine Stores (Ample) and partners in the travel and electronics category also. We will initially focus on travel, electronics and jewellery. Your money will go to merchants as advance, but you can change your mind and withdraw your savings at any time before the actual purchase is completed,” said Vardhan Koshal, co-founder, Tortoise.

The startups have embraced differing models. According to Hubble’s website, your money is deposited in an escrow account with its partner bank and you get a 10% discount on your purchases through the platform. Hubble is able to offer this flat percentage off through a mixture of using merchant offers and its own funds. 

Multipl has a Sebi-registered investment adviser (RIA) licence in one of its group entities. It allows you to either invest your money in mutual funds, using portfolios suggested by it or to use the money as payment advances. In the former option, you can ‘tag’ merchants and allow them to make you offers for discounts. These offers get crystallised when you eventually buy from them. 

Eventhough the money sits in a mutual fund in your name, you are free to buy from a third party altogether or not buy at all. Multipl also permits you to save money directly with the merchant concerned and avail discounts. 

The third platform Tortoise currently holds money with a payment gateway but plans to eventually remit your money to the merchant straight away. 

As a consumer though, there are some risks. The platforms say you can change your mind anytime. However, the merchant may get into a dispute with the platform and not honour the discount or return your money. Also, the platforms do not pay out any interest if you change your mind and withdraw your money. You only get your principal back. You might lose out on competing deals once you start paying advances to a particular merchant. However, for fans of particular brands, this may be a savvy method of bagging some discounts.

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