Welcome back to The Interline Podcast. There’s a golden rule of traditional journalism, which is just get out of the way and report the facts. Then there’s the alternative school of new journalism, where the author of a story is more prominent, and where people’s subjective viewpoints work their way into what would otherwise have been pretty dry and dispassionate reporting. I didn’t actually study journalism formally, despite doing it as a job now for a long time, but I know enough about the practice to put myself in that second bracket.
What we write about at The Interline, and what we discuss on these shows, is objective in the sense that we try and look at technology for fashion from every vantage point, and we try and always present things as they are rather than as we hope they might be in the future. But it’s subjective in that we — and in particular me — have a pretty strong editorial viewpoint on what we want to spend our time on. Mostly that viewpoint is informed by what we know our listeners and readers are interested in, but sometimes it’s shaped by things we have personal opinions about. And, cards on the table, the reason we haven’t done an episode on buy now, pay later, despite it being such a major force in fashion, is that I’ve always had a bit of a personal distaste for it.
To put that distaste into words as succinctly as I can: for a while now I’ve thought payment spreading was a bit of a crutch for an industry that should be able to find sustainable growth without incentivising people to buy things they can’t afford. And I’ve also thought that the fintech label, as applied to the mainstays of BNPL like Clearpay and Klarna, was a flashy veneer on some pretty run-of-the-mill unscrupulous and predatory lending. I’m putting some, but not all, of that away for today’s episode, for two reasons.
First, the UK has just introduced new guardrails for buy now, pay later lending that bring it much more in line with other lines of credit. That means affordability checks, consumer protections and so on, so now is a very good and important time to talk about this.
Second, my guest today is the CEO of a company that has a different angle on deferred payments — one that aims to offer some of the benefits for merchants and consumers, but without some of the risks. His name is Alex Forsyth-Thompson, and he’s the Founder and CEO of Float, a fintech company that offers, and I quote here, “card-linked instalments”, which we’ll define as we get on, rather than net new lending. Float is also aimed at high-value baskets and premium purchases first and foremost, rather than at spreading the cost of everyday essentials.
Now, despite not being a BNPL company by the traditional definition, Alex was game for me grilling him about basically this entire space that I’ve avoided for the last few years. And while I wouldn’t say I’ve come away from our conversation feeling all that differently about deferred payments in general, I will say that there’s a lot more complexity to engage with here than I expected — especially if we look at the rise of buy now, pay later as a bit of a commentary on fashion retail’s direction overall.
So let’s hear what Alex had to say.
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NB. The transcript below has been lightly edited.
Alex Forsyth-Thompson, welcome to The Interline Podcast.
Thanks for having me, Ben. Good to be on.
Looking forward to this one. Now, we start every one of these shows with two things. We try and build a snapshot of the guest’s day to day, figure out what their everyday work looks like, and we get people to define something that seems simple but sometimes has a bit of a sting in the tail. Let’s start with the everyday.
So you run a fintech company — correct me if you don’t describe it that way — but across two continents. South Africa, where you’ve been operating Float since 2021 and where you have more than 2,000 retailer partnerships, and now the UK, where you launched, I think, about a month ago ahead of the time that we’re recording this. Now, I’m no banking expert, but those are presumably different markets with different regulatory environments, financial infrastructure, consumer relationships with credit and so on.
Walk me through what that all looks like in practice. How much of your attention is drawn to each market, and how much hands-on product work are you still doing versus working with regulators and other bodies to get this rolling across two jurisdictions?
Yeah. So we’ve been operating in South Africa, which we still consider the primary market, so that’s pretty established. As you mentioned, we have quite a broad network of retailers. We have quite intimate relationships with various stakeholders in the industry, and we’ve ironed out a lot of the kinks in the product. But the reality is — and I’m sure we’ll get into the meat of it in some of your other questions — it’s built on global card rails.
So the beauty of our technology is that running the product side of it is relatively universal, and that’s from two perspectives. One is that ecommerce is the primary use case for the product, and integrations are universal: your Shopify, Magento, WooCommerce, or a classic API integration. A lot of the merchant communication is remote, even when we want to see them in person, which is an interesting behavioural trait. And then, of course, on the other side, the actual processing of payments always happens on the card rails. And as you know, Visa, Mastercard and others are universal, so it’s highly scalable.
To answer the question around focus areas: because South Africa is pretty established, it — I don’t want to say runs itself, because anyone who’s run a business knows that is not the case — but it’s very much a going concern and quite a well-oiled machine. So most of my focus is on getting the UK jump-started. We see it as the future primary market. We believe it’ll overtake South Africa quite quickly, and a lot of my time is spent not so much on product any more, but on business development, strategy, and engaging with industry stakeholders and the regulator.
And I hop between the two markets. I’m a dual citizen of both, which helps. It’s building off an existing base — same time zone, similar cultures, language, all these things. So you’d be surprised at how many similarities there are, and of course the problem statement that we’re solving, which we’re going to dig into.
Yes, and let’s do that now, as part of the definition. So I’m going to throw you a bit of a softball to start with. Don’t worry, I think I’ve got some tougher questions as we go. But tell me what a card-linked instalment is. You mentioned card rails there, so tell me what a card-linked instalment is, and explain how it’s distinct from what people listening to this will be thinking of if I said buy now, pay later — which is largely companies like Klarna that offer easy access to net new lending at the point of sale.
And explain at the same time why that distinction matters to the different parties involved in fashion transactions. So what it means to the brand or retailer, the shopper, and the payment provider. What does it mean to implement, and what does it take to use?
I think the starting point here is talking about the problem that we’re solving, which is fundamentally different. On the surface, if you don’t dig into it, it looks like these things are just theatre on the front end and it’s all the same. What Float solves for is the fact that there are many millions of consumers around the world with what we call the universal credit card problem.
It exists in South Africa. It exists in the UK. It exists very much in the States, and pretty much wherever credit cards exist. And that’s the fact that, if used well, credit cards are fantastic cash flow instruments. Many people struggle to use them well, and using them well basically means you swipe for it and you settle that thing monthly, if not every second month at the most. But many people don’t, or can’t. So it’s about beating the clock, as we say.
And at the same time, many of these consumers still have headroom on the card, so there’s credit available. Yet because they’re looking for more time, they go out and take loans elsewhere, which just shouldn’t be the case. So our fundamental belief is that many of these consumers do not need more credit. They need more time.
And structurally, that’s what our product gives them. It takes an existing credit card transaction and breaks it up into monthly instalments using the credit available on the card. If the credit is not available, we decline the customer. They have to have the full amount available. A quick juxtaposition with BNPL — the Klarnas, the Clearpays and so on.
BNPL is solving a different need. At least at its genesis, it was all about giving a younger audience, or maybe people who had thin credit files, access to credit for things that they wanted. And it’s generally small amounts over short periods, and that’s how they manage their risk, and then they hit you with late fees if you don’t comply. So I suppose the primary similarity is that you’re splitting into interest-free instalments, but Float is always within the bounds of existing credit, never outside of it.
So from a consumer point of view, I think it’s clear. From a retailer or brand point of view, is it any different to implement than it is to implement, say, a Klarna?
No, the integration is pretty much the same. Setting these things up on your store is very easy, obviously depending on the complexity of your store. So that’s all good. There’s the normal onboarding process, and the KYC or KYB work that we do with merchants.
But the value proposition is fundamentally different. Float is focusing on people who don’t want or need new loans, so we’re not trying to be another checkout lending option. People have credit cards, and what we’re saying to merchants is: if you give them more time on the credit they already have, they don’t have to jump through new hoops. They don’t sign up or apply for anything. They don’t have to download an app.
It looks and feels like a credit card transaction, obviously with all of the consumer duty disclosures and so on. It’s a fundamentally different proposition. And what we really target is the bigger baskets. That’s where the value proposition for Float shines brighter. So generally our average order values are much higher than a merchant’s normal AOVs, because it’s when someone is furnishing their home, or buying productive assets like laptops, that it really matters, and that’s the space we fit into.
OK, and I want to drill into some of that later on. But before we get too deep, let’s understand why we’re having this conversation on a fashion technology podcast. And I can take a guess, which is that clothing and accessories have been very important categories to the growth of traditional BNPL. I think something like 40% of users who take spread payment options through Klarna and so on are doing it specifically for clothing, footwear and accessories. And Klarna itself has the family behind BESTSELLER as its second-largest shareholder, so it feels like clothing and buy now, pay later have gone hand in hand for a while.
As you said, you’re proposing a fundamentally different product, but you must still see an opportunity to tap into that same closeness between fashion ecommerce and fintech. So tell me, what does that fashion opportunity look like for Float? How important is it to you, and why?
The honest answer, Ben, is that fashion sits outside of our primary verticals. It’s not far off, but where Float is used the most, as I was saying a moment ago, is more considered, big-ticket purchases — your laptops and phones, or finishing your home appliances. Also things that are budget surprises: tyres, that’s a huge category for us. But fashion, by nature of being in this instalment payment space, is actually our fastest-growing category.
It’s not yet on the same level, but we’ve got a host of global brands on the platform. Generally it’s more on the premium side of fashion as opposed to fast fashion — not that we wouldn’t serve it. So yes, it is a massive opportunity for us, for sure. With the Float use case, someone buying a larger fashion basket definitely is relevant, and the value for the retailer is: I’m onboarding someone who’s not overlapping with a Klarna or a Clearpay, and it’s going to be for my bigger baskets, so why not add it? And that’s what we’re starting to see happen.
That makes sense. Now, we’re recording this show at a pretty appropriate time. The UK’s Financial Conduct Authority, the FCA, which regulates markets and financial services, has just set down some new rules for BNPL and deferred payment credit, or DPC, companies in mid-July.
This is going to get confusing for me, because DPC means something very different over here on the fashion technology side — digital product creation — but I will do my best not to mix those acronyms up.
Anyway, that ruling puts the onus on providers, so deferred payment providers, to treat applications for these types of credit — net new credit, as you said, net new lending — the same way that credit card companies currently do. That means you run affordability checks and so on, you provide consumer recourse to, at least here in the UK, the Financial Ombudsman Service, and you get protection under Section 75, which puts equal responsibility on the card provider and the retailer to resolve things when transactions go awry. The general feeling, I think, is that this was overdue, and that there’s been a pretty serious consumer protection gap around that new-lending BNPL for the last few years in particular.
So why launch in the UK now? You’re a CFA charterholder and CFP qualified, so you know the landscape, you know what’s happening with regulations. Do you think you can get ahead of the game with a ready answer for the FCA that those like Klarna and Clearpay can’t? Or do you think Float’s model is simply fundamentally different enough that you’re outside, or adjacent to, the scope of those new rules?
So I think there are two questions there, Ben. One is, why the UK? The second is how we are approaching regulation with our product. The UK for us is, we believe, fundamentally the best fintech market in the world. It’s an acid test for us as a platform with global ambitions. And part of that is that they’ve got strong but progressive regulation. We entered the UK, just as a side note, via the Global Entrepreneur Programme through the Department for Business and Trade. So that opened a lot of doors for us to have front-footed engagements with the regulator and other industry bodies, which has been great, and really formed part of our decision to enter the UK.
Now, on the BNPL regulation — DPC officially — what they’re targeting is new third-party lending at checkout. And I agree with you, it was long overdue. But I suppose when innovation happens it often front-runs regulation, and then they catch up. Definitely a positive step. And primarily what they’re trying to do is put guardrails in place, not stifle players, but just to make sure that it doesn’t fall foul of treating consumers badly.
But Float’s model is not third-party lending at checkout. We are an instalment technology that allows merchants to open up their own card-linked instalment offering to their shoppers, and it’s within the bounds of existing credit card regulations and structures. So it’s a very interesting, different model.
We did engage the regulator before we’d even gone live, to understand where we fit, and it’s far more of a technology play than a lending play. And we’ll probably get into the meat of the regulations and where we sit between all of it. But fundamentally, as long as we’re playing within the bounds of that credit card — an instrument and an infrastructure that has been widely used for a long, long time — it’s very well understood, and that has given us some structural regulatory benefits that aren’t there with new forms of lending that sit off those rails.
Good answer. So that brings us, I think, to a little bit more detail on the credit card ecosystem in general. Earlier on you called them one of the best cash flow tools available when they’re used responsibly and correctly, which — you know I agree. I’ve given people the same advice, I’m sure everybody has: spend as much as possible on it every month to improve your credit profile, pay it all down at the end of the month, fantastic.
As you mentioned, though, time is the primary issue, because I did a little bit of background reading and the average UK adult apparently carries something close to £1,500 in credit card debt. And if you need more time to pay it off, the only way to do that is to shuffle it between 0% interest cards, if you don’t want to become part of the £20 billion in credit card interest that consumers are forecast to pay this year.
Tied to that, though, is this idea that credit cards can be very powerful for consumers, but they’re also immensely profitable for banks and lenders. They’re not just consumer tools. The typical APR for a credit card, I think, in the UK and the US is somewhere between 24-25%. There are a couple of stats I want to stack side by side with that. One is that the APR on credit cards in South Africa is apparently quite different — more between 10–21% — and the APR for Klarna is below 22%, I think it’s about 21.9%.
Give me some more insight into how the time portion of this allows people to use credit cards responsibly. Because if you looked at it on a pure interest basis — if I make a purchase and I’m paying interest on it — from that pure vantage point I’d be better off using a BNPL provider than I would be using a credit card. So walk me through how you see this as a consumer tool.
Yeah, this is an interesting one, and I think it’s going to be very helpful to dig straight in. So think about what happens in a normal credit card transaction. Let’s say something meaningful that someone might struggle to settle — for round numbers, let’s say £800.
So in a normal credit card transaction, someone swipes, and that’s either with a zero balance or on top of a rolling balance. Thirty per cent of UK consumers sit with a rolling balance, so let’s just use that example. They now have to settle £800 on the card within that window. Otherwise, as you said, interest is going to mount up. But many can’t, or just don’t, because they’re maybe not behaviourally trained that way. What Float is doing is, one, making sure that £800 is available on the card. If it’s not, the user is declined. If it is, they’re approved. The full amount is authorised on the card, meaning that credit is effectively blocked off for use until it’s paid off, and we simply bill the card in monthly instalments.
So let’s say four instalments, for ease of reference. You are paying £200 today, billed off your card, £200 in a month, and so on until it’s paid off. Now, for the consumer, all they have to do is settle the instalment amount on the card. If they never settle the instalment amounts, yes, interest will rack up, but it is always less than had they swiped with their card in the first place, when they use Float.
And I think an important thing to talk about is our economics, as we call it — our revenue model. We make a fixed fee from the merchant. That’s our primary revenue driver. We have no late fees. We have no interest. So our technology is not incentivised for people to take longer paying off. As soon as you have an APR-driven revenue model, your incentives totally change.
So I think that fundamental difference is important. And maybe I’ll pause there, Ben. You might have a follow-on question, but I want to unpack some more of the structural differences.
Yeah. So my only follow-on question would be: you mentioned the flat fee for the merchant there. What does it mean for you to grow, then, on that basis? Does scale just literally come from you onboarding more merchants, more retailers over time? Because there isn’t, as you said, that incentive to get people hooked into long-term lending. That’s not where additional revenue comes from; there are no late fees and so on. So the path to growth for you is presumably embedding and integrating into more retailers, and those retailers subsequently being able to drive either higher basket values or attract new consumers, by dint of having this as an option.
Yeah, exactly. And the beauty of the product, as I said to you, is that it’s globally scalable. These are global credit card rails.
I think there are going to be regulatory nuances in markets — it’s not just an open playing field. But, as I’ll elaborate on in a bit more detail, structurally it solves a lot of the concerns regulators have. But exactly that: it’s building a global network. We have some amazing global brands that, I suppose, use South Africa as a proof point and have said, listen, this will be super beneficial and complementary to my checkout in this other market. And that’s been a useful follow-on strategy for us.
And one other interesting element, Ben — this is more often the question we get. It’s not, is what you’re doing good for the consumer? It’s more, how do banks feel about this? Because they want to earn that interest, but now they’re earning less of it.
And the interesting answer there is that we’re the only alternative payment method, as far as I know — this card-linked instalment model — that drives all volume to the credit card. Almost every other player is trying to run away from the credit card because of interchange and cost of processing. So that’s a very interesting dynamic. And I suppose there is no perfect model, and I think we’d be disingenuous to say there is, but I think it ticks a lot of the boxes on all sides of the table.
And a final thing I want to add: one of the big bugbears that the regulators have mentioned around things like BNPL — which I do think is a fantastic product, by the way, it just obviously needs guardrails — is the risk of stacking. People borrowing from four different lenders in a week. No one has visibility of it, and it’s debt people can’t repay. With our product, it’s just structurally designed to prevent that. The whole amount has to be available. Credit card payments pull into the bureaus automatically, and there’s no escalating fee harm, because we don’t stack on late fees or missed payments. It’s just fundamentally different.
That’s a really good answer. Now, we’ve just talked about growth for you, and how that relates to onboarding new retailers, and how it relates to your relationship with the banks. Thinking back to a survey we did last year, we asked fashion professionals across every job role in the market what their biggest priorities were, and people were pretty aligned on — as you would probably expect — profitability, margin, growth and protection, and expansion opportunities into new categories. So growth is a big lever here.
And that sounds really relevant to you, because yours is a model that is designed for bigger baskets, as you said — about 130% larger, I think, by your metric. But I’ve struggled to reconcile some of this, and I’m not going to hold you accountable for the whole economy here. I struggle to reconcile the idea that brands have to find growth by encouraging people to buy things they definitionally can’t afford, or that they need to spread out. You only need to look at the move to the leasing model for iPhones to get some indication that premium goods have a dwindling affordability to them, and that they are now things people need to spread out even more than they have done with previous carrier subsidies and the like.
So give me some insight into why you think there is a pathway for deferred credit to pursue growth that isn’t just encouraging shoppers to raise their own risk profile so that the brand or the retailer can achieve their own growth ambitions. That’s the part I struggle with a little bit here, and it’s philosophical and ethical as much as it is technical, I think.
Yeah. And listen, I’m going to try and narrow it down and simplify it, certainly from our perspective, but it is a complex question. It’s an existential question in terms of just economics and consumerism, right? Like, should people ever be buying things they can’t afford?
The reality is that credit is a fundamental part of any economy. It drives social mobility, it drives cash flow. The problem is — and I’ll go back to the incentives — show me how people earn their money and I’ll show you the outcome, I’ll show you the behaviour. So you have got to look at how people earn their money to understand where, not the whole model will end up, but where certain players will end up without guardrails.
And I think that’s what’s most important. In an altruistic world, you would never need credit. Everyone would have money and affordability would be perfect, but we know that’s not the case. So I think it’s about which models are adding value and are responsible. And to give BNPL some credit — excuse the pun — the structural intent there was to offer at least good payers an interest-free period to pay off.
Whereas with traditional credit — your old-school store accounts, point-of-sale loans, personal loans — you’re incentivised the other way. You make money when people are in debt, and often the good payers are subsidising the bad payers. That’s how lending works. So high interest rates all round, and you subsidise your losses through those who actually pay. Whereas most of these interest-free models make their primary source of revenue from the merchant.
Yes, I think some players maybe are earning more than they should on late fees, but I still think this instalment offering is fundamentally better, and it’s inevitable. We can talk to how I see the future panning out — I think that could be an interesting discussion.
So in summary, for us, where the problem comes in is the incentives, how people are making the money, and, again, net new credit. That’s just not a space where our DNA is, certainly not right now, and I can’t see it being the case in the near term. We’re focused on existing borrowing capacity that someone’s issuer — who has sight of their income and expenses — has made the decision to offer. And if that’s not available, we simply won’t offer it.
And now I think I’m going to give a bit of runway to the opposite viewpoint here. So, to be clear, you said BNPL is an interesting, good model, and so on, but not one you’re engaging in. And I also want to be clear that I don’t think all lending is done by Dickensian money lenders squeezing the poor for every penny they have. You mentioned you’re especially active in consumer electronics, productive devices, furniture and so on, and the premium end of fashion, and that you see better results when Float is deployed at merchants with higher basket values.
That’s the interesting part of this to me. I think a lot of people have compartmentalised the idea of deferred payments as being a way for people to just spread essentials, and that it’s a symptom of what I just talked about — a societal ill where people can’t afford the things they need desperately. There’s the other end of this, which is that these are discretionary, high-value, premium purchases that people who theoretically at least can afford them are going after.
So tell me who those shoppers are. Tell me who is behind these kinds of high-value baskets on the deferred payment side of things. And the reason I’m asking is that, as you said, you’re not going after fast fashion, but mass-market fashion is pushing upwards at the minute. There’s a conscious strategy of premiumisation — not a word I love, but it’s the operant one — where companies are trying to pursue higher price points, they’re trying to go after higher-value consumers and so on. Because I think that makes a good case for your model here.
Yeah. So our target shopper, in a nutshell, is a credit card holder with unused limit. And also generally digitally native, which of course is a large audience in the UK. But when you narrow those three factors down, you’ve got a higher-income audience, generally speaking, with more established credit and often quite deliberate purchases. These are not people who have never had credit before, for the most part.
These are people who have earned the right to have a credit card, and if they have amounts available then generally they’re managing it to some degree. And what we’re trying to solve for is that people have headroom on the card, and, to your point, they’re either taking out a whole new card just to buy themselves time — which has massive risks to it — or they’re going and taking out a BNPL loan when they have this massive headroom available.
On the push upward into fashion, the fact that we’re starting to see growth on our platform might speak to that point of yours. I can tell you that even the uptake at fashion retailers is solid, and I suppose that’s why we’ve retained all the ones that we have, and the basket uplift is good. But, again, the things that people use Float for — and it’s the vast majority of our volumes — are laptops, for themselves or even for their businesses, and sports and hobby equipment, which I suppose is a bit more of a want than a need, but it’s not throwaway money, and furnishing their homes, and that sort of thing. So it generally is a more considered purchase that people are making.
That’s not to say it can’t be used for things that aren’t felt needs, but that is at the heart of what we do.
Now I want to ask you something I asked the chairman of a legal firm about recently, and it’s something that’s been buzzing around in my head for probably a year or so now. We’re currently seeing — you mentioned integrating Float, but also Klarna, all these other things — options that are available for merchants to integrate into the checkout process. We’re starting to see the first serious integrations of conversational AI into this process as well. So that means text and voice agents that are tuned for engagement, and for hyping people up, and personalisation.
If you combine that with deferred payment, all of a sudden my concern is that you have a very low-friction on-ramp for people buying things. I think Klarna has a ChatGPT plugin, for instance, so this is not theoretical. So my concern is that we all know people spend more when instalment options are put in front of them. We all know that LLMs — interacting with ChatGPT, Claude, Gemini and so on — can be very persuasive. I think we’re going to see, in the fairly near term, cases of AI agents talking people into purchases that those people are then still paying off eighteen to twenty-four months later, and I think that’s a looming regulatory issue.
So what’s your take on that? What’s your take on the role that you expect AI to play in the path to purchase?
Yeah, I agree with your concerns. Look, AI — I’m geeking out over AI at the moment, just for my own productivity on a daily basis. It’s been fantastic. But let’s get away from commerce for a second.
I’ve had it talking me into things that, actually, if you step back and look at them, do not make total sense. And I think when you then overlay that on the management or use of people’s money without correct guardrails, that is a concern for everyone. And for me, getting to the heart of what you were alluding to, that all comes down to consumer duty, and proper disclosures and explanations of what people are getting into. Ultimately, an agent is representing the provider that’s behind it. So let’s assume that people are doing affordability checks, that those aren’t being gamed, and that regulation is being adhered to for the most part.
Where I see the risk here is not fully disclosing what someone is getting into when making the purchase. So they might have had a cold look at it, ticked all the boxes for affordability, but not really understood what they’ve got themselves into. So where I think regulation probably would come into play is not in trying to stifle innovation and slow down agentic commerce, but in saying to providers: listen, any agent that you have representing you, pointing towards your product — you are liable for what they say and how they explain it, and you need to evidence that what that consumer’s been shown aligns with best-practice consumer duty and disclosures. I think that’s probably the most common-sense way the industry could look at it.
That’s a really good answer, and it does satisfy me. It’s something that’s been bothering me, so I’m glad you see it as a potential looming issue as well, and that you’ve given some thought to the redress for it. I’m going to close with a question that you can slice however you want. I think it’s clear from some of the questions I’ve been asking that I see growth coming from lending, or growth coming from credit, as being a bit precarious for an industry that is pursuing growth at all costs and using deferred payments as a bit of a prop to get there.
But as you said earlier, as long as we’ve had money we’ve had borrowing and lending, and the desire to spend now and pay later is pretty universal. So if we think over the next three to five years about the two parties to that exchange, the buyers and the sellers, what do you think it looks like for technology to have made a positive difference for both of them?
Yeah, this is real crystal ball stuff, but the way that we see it panning out — and I think there is just not going to be one winner-takes-all model — is that instalment payments are an inevitability. And, to give BNPL some credit, it’s ignited that fire outside of markets that have always traditionally offered instalments, like Brazil and Mexico. I don’t know if you’ve ever looked into Latin America. We just see instalments becoming a native feature, particularly on cards, day to day. This is something that’s going to be baked into financial infrastructure: more predictable repayments and, interestingly, not having the consumer as the sole funder of that.
You’re seeing interesting buy now, pay later models that are funding that cost via advertising. You’re seeing, obviously, the traditional models funded by merchants. It’s not to say the consumer won’t or shouldn’t ever be charged, but I think it really opens up the doors for some interesting innovations there, and finding different ways to finance purchases. But again, at the heart of it — and I think this has been a common thread with all your questions today — is how do you have the guardrails in place to make sure that that whole perfect-sounding free money scenario doesn’t get away from people? That you’re not creating some systemic risk here because there’s all of this free money. So naturally, with these innovative models, you’re going to start seeing regulation pop up.
And I think the way the FCA has done it in the UK has really been practically applied. I know back in South Africa they look to markets like the UK, which I suppose have been a bit more forward-thinking in their innovation, and they will follow suit. But really, as long as people can demonstrate that affordability is done relatively rigorously — it doesn’t have to follow traditional affordability methods, but you can demonstrate that you’ve lent money out responsibly, and that fair, proper disclosures are shown to consumers — I just think this thing is here to stay. And zooming right into Float, I think pretty much every credit card is going to have some native built-in instalments feature, and that’s always most effective at checkout, funded by the merchant.
Perfect. Well, that’s a really good vantage point on where things are headed from here. Alex, thanks for letting me quiz you on a pretty broad topic but, as you’ve said, with a thread running through all of it. It’s very clear you know your stuff, and I really appreciate your perspective.
Cool, Ben. Great to chat to you, and thanks for the questions. I hope people enjoy listening to it.
And that’s the end of my conversation with Alex. I think you’ll agree he’s a pretty smart guy who’s clearly given a lot of thought to the product he’s building. And while he reiterated a couple of times that fashion isn’t a major vertical for Float right now, I think there’s a lot of what he and I just talked about that’s probably applicable to what you do — and it’s set to become more applicable as time goes by.
Again, I don’t think I’ve turned a corner on the lending side of BNPL in general, even with the regulations being put in place here, but I have come around on the idea that spreading payments doesn’t necessarily mean that the industry is in its death throes, or that it’s run out of other ideas.
Finally, obviously The Interline doesn’t offer any financial advice, but if you’re sitting with a credit card balance right now and you have the means to clear it, you know what to do.
I’ll be back next week with a very different topic, so thanks for listening today, and I’ll talk to you again really soon.
