Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Personal Finance
FSRA Launches Tool to Verify Financial Advisors’ Credentials
Campaign | March 2, 2024
Image: Freepik/rawpixel.com
Ontario regulator introduces an online tool to check financial advisors' qualifications
The Financial Services Regulatory Authority of Ontario (FSRA) has initiated an educational campaign aimed at encouraging consumers to verify the credentials of financial advisors before seeking advice. With the introduction of the new online Check Credentials Tool, individuals can now easily confirm if their financial professionals possess the necessary qualifications to use titles like Financial Planner or Financial Advisor in Ontario. The Check Credentials Tool allows consumers to verify if financial professionals hold the required credentials to use specific titles, ensuring they meet minimum education standards and are under proper supervision.
See: Ontario’s FSRA Spearheads Insurance Innovation with Direct Access Model
FSRA's research indicates a concerning trend where 50% of respondents spent more time researching their last cellphone purchase than verifying the credentials of their financial advisor. The tool is designed for convenience, enabling users to quickly check a financial professional's standing, including any disciplinary actions. In Canada, financial advisor scams have evolved, becoming more sophisticated and causing significant losses to consumers.
Huston Loke, Executive Vice President of Market Conduct, FSRA:
"In many cases people are entrusting their life savings to financial professionals and they expect that these people are properly trained and supervised. We encourage consumers to check credentials and we are making it easy through our new Check Credentials Tool."
Investment Scams Are Getting More Sophisticated
In Canada, financial advisor scams have evolved, becoming more sophisticated and causing significant losses to consumers. According to a CTV News, the top scams include:
See: Can AI Truly Replace Human Financial Advisors?
- Investment Scams: These scams lead with Canadians losing substantial amounts, such as $70.2 million in 2021 alone. Fraudsters create fake accounts or websites, convincing people to invest in cryptocurrencies or other ventures, with none of the money being genuinely invested.
- 'Pig Butchering' Scams: Utilizing social media and dating sites, scammers build virtual relationships and eventually solicit money, resulting in over $42.2 million lost by Canadians.
- Spear Phishing: This scam involves sending emails or texts pretending to be legitimate entities to access personal accounts, causing $38 million in losses.
- Merchandising Scams: Using classified ads or fake websites to sell items or rent properties, leading to $5.6 million in losses.
- Service Scams: Offering fake services like phone plans or insurance to steal personal information or access bank and credit card accounts, with $4.8 million lost.
Outlook
By making it easier for individuals to verify the qualifications of financial advisors, the FSRA is empowering consumers to make more informed decisions regarding their financial planning and investments.
See: OSC’s New Financial Advisory Reforms
This initiative promotes transparency and accountability among financial professionals and also contributes to the overall trust and integrity of the financial services industry.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Travel Insurance: Considerations for Global Entrepreneurs
Feb 28, 2024
Image by tonodiaz on Freepik
Navigating International Travel Insurance: Key Considerations for Global Entrepreneurs
As the world gradually recovers from the pandemic, travel insurance has evolved into a fundamental necessity for Canadians looking forward to their next trip. As a matter of fact, a recent study by Allianz Global Assistance highlights this shift in perspective, with 89% of Canadians indicating they plan to purchase travel insurance for future travels. Furthermore, 74% believe that having travel insurance is as important, if not more so, after the pandemic, with 32% considering it more vital than before.
For businesses engaging in international activities, this increased attention to travel insurance is particularly relevant. As global travel picks up, ensuring the safety and security of individuals representing their organizations during travel is paramount. This is where international travel insurance comes into play, offering customized protection against the unique challenges faced by global entrepreneurs.
In this beginner's guide, we aim to simplify the complexities surrounding international travel insurance for entrepreneurs so that you can confidently navigate the intricacies of international travel, knowing you have taken the necessary steps to protect your ventures abroad.
Understanding Essential Coverage Options
Before diving into the details, it's important to grasp the essential coverage options available to global entrepreneurs considering international travel insurance. This foundational knowledge is key to ensuring that you select the best policy that offers comprehensive protection tailored to the unique needs of your business ventures abroad.
At the core, a robust international travel insurance plan should include coverage for medical emergencies, trip cancellations, and interruptions, as well as baggage loss and delays. For entrepreneurs, additional considerations such as coverage for business equipment, emergency evacuation, and liability insurance become equally important, given the potential for unexpected incidents that could impact both personal and business assets.
Furthermore, policies offering support for legal issues or providing financial protection against accidents involving rental vehicles can prove invaluable. Given the varied nature of international business travel, identifying and selecting a plan that addresses the broad spectrum of potential risks is paramount.
By focusing on these essential coverage options, entrepreneurs can lay a solid foundation for their travel insurance policy, ensuring peace of mind.
Assessing Business Travel Risks
The insurance needs of each entrepreneur or business can vary depending on several factors, including the industry, destinations, frequency of travel, and the nature of the business activities conducted abroad. To choose the most suitable travel insurance policy, it's essential to conduct thorough risk assessments to identify potential hazards and liabilities specific to your business.
Here are some insightful inquiries to help steer your decision-making process:
- What are the common risks associated with my industry and the countries I will be visiting?
- Are there specific business activities or equipment that require additional coverage?
- What legal or healthcare systems will I be navigating, and how might they affect my insurance needs?
- Do I have employees traveling with me, and what coverage will they need?
- How might political, environmental, or health-related events impact my travel and business operations?
By addressing these questions, businesses can better understand their unique risk profiles, paving the way for selecting an international travel insurance policy that offers adequate protection. This strategic approach not only safeguards the business but also ensures that entrepreneurs can focus on their international ventures with confidence, knowing they are well-prepared for various contingencies.
Comparing International Travel Insurance Plans
Once you've pinpointed your insurance needs, the next step is diving into the sea of options available to you.
Begin by gathering quotes from multiple insurance providers, ensuring you're getting a comprehensive view of what's out there. While you're at it, it's critical to go beyond the surface and delve into the details of each policy. This means asking questions about policy specifics, coverage limits, and deductibles.
In addition, reading reviews, such as the AIG Travel Guard insurance reviews, can provide invaluable insights. Don't make the mistake of focusing solely on the price tag. The insurer's reputation, customer support quality, and the efficiency of their claims process are just as important. After all, a cost management strategy doesn't mean opting for the cheapest option; it means finding the best value for your specific needs.
Navigating Legal Compliance for International Travel Insurance
Ensuring compliance with legal requirements is a cornerstone of procuring international travel insurance for entrepreneurs. Different countries and regions have their own mandates regarding insurance for business travelers, making it imperative for you to familiarize yourself with these regulations.
From workers' compensation to health coverage, staying informed about what's legally required not only keeps you within the bounds of the law but also shields your business from potential fines or legal hurdles. Additionally, consider the contractual obligations that may come with certain partnerships or client agreements, as these often stipulate specific insurance coverages.
Keeping Your Coverage Current
As your business journey evolves, so do the intricacies of your travel insurance needs. It's not just about securing coverage; it's about ensuring that it remains perfectly aligned with your changing business landscape.
Therefore, regularly revisiting your insurance policy isn't just good practice—it's essential for maintaining the protection your business relies on as it grows and enters new markets. This could mean adjusting coverage to include additional employees, updating policies to reflect new types of business activities, or enhancing coverage for emerging risks. An annual review with your insurance provider can help identify these shifts, ensuring that your insurance strategy continues to provide the robust safety net your business requires.
Image by pressfoto on Freepik
By understanding coverage options, assessing risks, comparing plans, ensuring legal compliance, and regularly updating coverage, entrepreneurs can venture abroad with confidence. Embrace these guidelines as a roadmap to protect your business journeys, ensuring that you're not just prepared for the challenges of today but fortified for the opportunities of tomorrow.
See: How to Navigate Small Business Insurance: A Beginner's Guide
With the right strategy, international travel insurance becomes not just a safety net but a strategic asset for global business success.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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‘Score’ Dating App for Financially Savvy Singles
Innovation | Feb 20, 2024
Image by Drazen Zigic on Freepik
Introducing 'SCORE' App: A New Approach to Dating and Financial Wellness
In an innovative blend of finance and romance, Neon Money Club has unveiled 'SCORE,' a dating app designed for individuals with good to excellent credit scores. The app requires users to have a healthy credit score for sign-up, connecting them with financially like-minded individuals.
See: Sustainable Business and The Regenerative Future
This initiative not only fosters meaningful connections based on mutual financial goals but also offers valuable resources for those working towards improving their credit scores and financial literacy. It goes beyond shared interests to prioritize financial wellness, ensuring users are matched with financially like-minded partners.
Cream Card Features
Neon Money Club's commitment to financial wellness is further exemplified by collaborations like The Cream Card™, a credit card that allows members to convert points into stock market investments. Such innovations underscore the need for creative and diverse voices in the next generation of finance.
- Cardholders can convert their points to invest in the stock market, specifically in assets like the Vanguard S&P 500 ETF, directly through Neon Money Club. This feature is designed to encourage and facilitate personal investment, offering a practical way to engage with financial markets.
- Neon Money Club matches the points cardholders convert to investments, doubling the value of their investment points.
- The card is made from 14g of metal with a premium matte finish, emphasizing its luxury status.
- The card offers a range of benefits, including protection on the Amex network, acceptance at 99% of places in the US that accept credit cards, unlimited 1.5X points on all purchases, and various discounts and offers with partner brands.
- Applying for the card does not impact the applicant's credit score due to the use of a soft credit check. A hard credit inquiry is only made when the applicant accepts the pre-ordered card.
See: A Fintech Survival Guide to Understanding Gen Z Finance
Luke Bailey, CEO of Neon Money Club:
"Financial wellness often takes a backseat. At Neon Money Club, our mission is to inject financial awareness into the fabric of everyday life."
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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A Fintech Survival Guide to Understanding Gen Z Finance
Education | Feb 8, 2024
Image by wayhomestudio on Freepik
Understanding Gen Z Finance: A Fintech Survival Guide
As Generation Z (born between 1997 and 2012) steps into financial independence amidst economic challenges, their unique financial behaviors, preferences, and terminologies come to the forefront.
Understanding these aspects is crucial for fintech professionals aiming to engage, communicate, and develop services for this demographic effectively.
See: Gen Z VCs are entrepreneurial, digitally native, values-focused
This guide aims to provide fintech professionals with insights into Gen Z's financial mindset and practical tips for engaging with this generation effectively. As Gen Z's influence grows, so does the importance of adapting fintech offerings to meet their expectations and needs.
Gen Z Finance Terms Explained
These Gen Z finance terms open up conversations about finances in a more relatable and less taboo manner.
- Bougie / Boujee: Refers to someone with expensive, lavish tastes. It's about enjoying the finer things in life without shame.
- Bread: A slang term for money, derived from the idea that bread is made of dough, which is another common slang term for money.
- Cash Stuffing: Also known as the cash envelope method, this budgeting technique involves allocating specific cash amounts for different expenses. It has gained popularity on TikTok among Gen Z, though experts caution against having too much cash on hand.
- Doom Spending: Similar to doom scrolling, doom spending involves spending money despite economic concerns, often as a way to cope with stress. A significant portion of Gen Z engages in this behavior, choosing to cherish purchases now instead of saving for an uncertain future.
- Drip: Used to describe someone wearing expensive items or a nice outfit in general. It's about showcasing wealth or style through clothing and accessories.
- Finesse: To trick someone into giving you something, often used in the context of acquiring money or benefits cleverly.
- Flex: To show off possessions, knowledge, or other intangibles. It's about displaying one's success or wealth openly.
- Free Money: A term that encompasses any monetary gain that doesn't affect one's current bank account balance, such as gifts, store credits, negative credit card balances, and cash back.
See: Fintech Fridays EP55: Global Hiring Trends: How Gen Z Talent Thrives
- Girl Math: A lighthearted concept among young women rationalizing spending through humorous comparisons, like considering a purchase "practically free" if it's under a certain amount.
- Glo Up: When someone looks better or has a better lifestyle than before. It's about personal improvement and success.
- Guap: Means a lot of money. It's used to describe having a significant amount of wealth.
- Gucci: Derived from the high-end fashion brand, meaning you're doing well or everything is good.
- Live Your Best Life: Enjoying life to the fullest in a unique, individual way.
- Loud Budgeting: A term coined by TikTok user Lukas Battle, emphasizing saving money not because of a lack of funds but as a choice to not spend. It's about being vocal and proud of saving money, seeing it as a flex.
- Secure the Bag: Getting money or accomplishing goals in general. It's about achieving success and financial stability.
- Soft Savings: This concept describes Gen Z's preference for spending on experiences and personal growth now rather than saving for the future. They prioritize mental wellbeing and personal fulfillment over early retirement.
Financial Mindset and Challenges
- A significant challenge for Gen Z is their lack of emergency savings, exacerbated by high living and college costs, alongside entry-level job wages. This lack of savings negatively impacts their mental health, with over half reporting financial concerns as a stressor.
- Gen Z shows a preference for less volatile investments, with 38% moving their money from stock-related investments to safer options like savings accounts, money market funds, CDs, or government bonds. This is a higher percentage compared to millennials (33%) and Gen Xers (17%). Having said this, there is some mixed research on this question with a CFA and FINRA survey concluding that Gen Z Canadian's are actively investing.
See: Millennial and Gen Z Workforce Demand Purpose-Driven Work: Deloitte Survey Insights
- The impact of the economy, including inflation and rising prices, has a significant impact on Gen Z's mental health. Key stressors include paying for everyday expenses and housing costs, with over a quarter reporting unemployment and actively seeking jobs.
- Achieving financial independence is a considerable challenge for Gen Z. They face unique financial challenges as they navigate adulthood, such as paying for college, starting a career, and establishing a budget.
Approach to Money
- For Gen Z, education is often viewed as a pathway to financial stability, with 88% of the first Gen Z grad class choosing majors based on job availability.
- Growing up in the age of technology, Gen Z's money habits are heavily influenced by the internet and social media. They are more likely to seek financial advice online and use budgeting tools and apps.
- A significant portion of Gen Z receives financial support from parents for housing and health insurance. However, there are misconceptions about the importance of building credit and investing for retirement, with many not recognizing the need to start these financial practices early.
- Gen Z prefers online banking, with a majority content to do their banking completely online with only 20% opting for brick-and-mortar for everyday financial needs. They are less likely to have written a check or visited a physical bank, indicating a shift towards digital financial management.
Bottom Line
Understanding Gen Z's unique financial challenges and mindset is crucial for fintech companies looking to engage this demographic.
See:
Fintech Opportunities in Wealthy Retired Boomer Markets
Fintech Opportunities in the Wake of Tightened Credit Liquidity in Canada
Fintech solutions that offer educational resources, tools for managing finances, and options for low-risk investments can appeal to Gen Z's desire for financial stability and mental well-being. Additionally, promoting financial literacy and independence through user-friendly platforms can help address some of the misconceptions and anxieties Gen Z faces regarding money.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canada’s Payment Landscape 2009-2022 – BoC
Payments Research | Jan 31, 2024
Image by storyset on Freepik
Deciphering Canada's Payment Landscape from the the 2022 Bank of Canada Survey
The 2022 Methods-of-Payment Survey by the Bank of Canada shines light on evolving payment preferences in Canada, spanning over a decade looking at data from 2009 to 2022. The research shows a shift from traditional cash handling to an increasingly digital-centric payment culture through the backdrop of new payment methods like digital currencies and the unprecedented impact of the COVID-19 pandemic.
See: Feds Promise Open Banking Laws in 2024 and to Broaden Access to Payments Canada
Image: Bank of Canada Payments Landscape 2022 Survey, Chart 3
Takeaways
- Canadians held an average of $130 in cash in 2022, mirroring 2021 figures, despite significant inflation, indicating cash's resilience.
- Online transactions surged, with nearly 15% of purchases made online in recent years, a big increase from less than 5% in 2013 and 2017.
- Credit cards were still the predominant payment method in 2022, constituting 48% of all transactions and 59% of total transaction value. This includes contactless payments which represent over 66.7% of credit card transactions in 2022, highlighting the adoption of convenient payment technologies.
- The COVID-19 pandemic catalyzed a significant behavioural shift to online shopping, with the volume share of online shopping rising from 3% in 2017 to 12% in 2020.
- Interac e-Transfer saw widespread adoption, used by 51% of Canadians, overshadowing digital currencies like Bitcoin, which had a much lower usage rate.
- ATM cash withdrawals fdeclined by about half by 2017 (from 2009).
- Nearly all small and medium-sized businesses in Canada accepted cash in 2022, with a substantial increase in debit and credit card acceptance since 2018.
- The survey highlights a multifaceted payment landscape in Canada, accommodating various methods including cash, cards, mobile payments, and digital currencies.
Closing Outlook
While digital and contactless payments are on the rise, the enduring role of cash underscores the need for a multi-pronged approach to payment options to ensure inclusivity and accessibility in Canada's financial services, catering to all segments of the population.
See: JPMorgan’s New Programmable Payments in Blockchain
As the country progresses further into the digital age, continuous monitoring and adaptable strategies will be essential for financial institutions and policymakers. This approach will ensure alignment with evolving consumer trends and technological advancements.
Download the 48 page PDF report --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Kakeibo: Mindful Budgeting for Financial Wellness
Personal Finance | Jan 26, 2024
Kakeibo, which translates to "household financial ledger," is not just a method of managing money; it's a philosophy of life, emphasizing mindful spending, saving, and living.
What is the Essence of Kakeibo?
- Developed in 1904 by Hani Motoko, Japan's first female journalist, Kakeibo is more than a budgeting technique; it's a mindful approach to personal finance. It starts with reflection, asking four pivotal questions about income, saving goals, current spending, and areas for improvement. This introspection lays the foundation for a more purposeful financial journey.
- At the heart of Kakeibo is the categorization of expenses into four simple groups: Essentials, Non-Essentials, Culture, and Unexpected. This classification aids in clarifying and prioritizing expenditures, making it easier to identify areas where one can save more effectively.
See: Future of Neobanking: Exploring the Landscape of AI-Powered Digital Banks
- A unique aspect of Kakeibo is its emphasis on manually recording expenses. Writing down each transaction fosters a deeper connection with our spending habits, encouraging a more conscious relationship with money.
- Unlike traditional budgeting methods that focus heavily on numbers, Kakeibo prioritizes mindfulness. It's about understanding the 'why' behind our spending, aligning our financial habits with our life values and goals.
- Kakeibo is not a one-size-fits-all approach. It's adaptable, encouraging individuals to modify categories and methods to fit their unique financial situations and goals.
Tips On How to Spend More Mindfully
Incorporating Kakeibo-inspired strategies into mindful spending can be transformative. These include:
- Waiting 24 hours before making non-essential purchases
- Avoiding impulse buys during sales
- Regularly checking bank balances
- Opt for cash transactions
- Placing thought-provoking reminders in wallets
- Avoid environments that encourage unnecessary spending
See: 2024 FCAC: Better Financial Future Challenge
By implementing these methods, one can make more deliberate financial decisions, potentially leading to increased savings and wiser investment choices.
What Can Fintechs Learn from Kakeibo?
A FinTech company developing a personal finance app can draw valuable insights from Kakeibo to enhance user experience and effectiveness. By integrating these Kakeibo principles, a personal finance app can foster a more mindful, intentional, and user-friendly approach to budgeting and financial management. Key learnings include:
- Incorporate 'mindfulness' features that encourage users to reflect on their financial goals and the reasons behind their spending. This could be through prompts or journaling features within the app.
- Adopt Kakeibo's simple categorization system (Essentials, Non-Essentials, Culture, Unexpected) to make tracking expenses more user-friendly and less overwhelming.
- While automation is key in FinTech, encouraging manual entry of some expenses can create a more mindful connection with money, akin to Kakeibo's practice of writing down expenses.
See: Neo Financial Launches a Wealth Management Platform for Retail Investors – Neo Invest
- Allow users to personalize the app according to their financial situations and goals, reflecting Kakeibo's adaptability.
- Incorporate educational materials or tips on mindful spending and saving, inspired by Kakeibo principles, to guide users towards more intentional financial habits.
Closing Thought
In an era where financial stress and complexity are on the rise, Kakeibo offers a refreshing perspective. It’s a mindful, simplistic approach that aligns financial management with personal values, promoting a balanced and satisfying life.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Klarna’s New $7.99 Monthly Subscription Plan Pre-IPO
BNPL | Jan 24, 2024
Image: Unsplash/Christiann Koepke
Klarna Introduces Monthly $7.99 Subscription Plan Ahead of Anticipated IPO
The latest development in the Buy Now, Pay Later (BNPL) sector is the introduction of Klarna's new subscription plan, "Klarna Plus," priced at $7.99 per month. This move comes as Klarna gears up for its anticipated initial public offering (IPO). The Klarna Plus subscription offers several benefits to its users, including no added service fees when using Klarna’s One Time Card, double rewards points, and access to exclusive discounts with popular brands like Nike, COACH, Macy’s, Instacart, and GOAT. The company estimates that loyal Klarna users could save about $12 monthly through this plan.
See: Klarna’s Meteoric Rise in the Canadian Financial Ecosystem
The new subscription model appears to be part of Klarna's strategy to diversify its revenue streams and enhance its appeal to investors ahead of its IPO. By introducing a monthly subscription, Klarna not only aims to lock in its most dedicated users but also to establish more predictable, recurring revenue. This is in contrast to the less predictable nature of one-time transactions which have been typical in the BNPL sector.
Klarna is also planning to launch a high-yield savings account, which may offer higher interest rates for Klarna Plus customers than non-users. This is part of Klarna's broader strategy to expand beyond its traditional BNPL services and offer a wider range of financial products.
This strategic shift by Klarna and others in the BNPL market reflects a growing trend in the fintech industry to create more stable and diverse revenue streams, especially as these companies prepare for public market debuts. Competitors in the BNPL space, like Affirm, are also reportedly considering similar monthly plans, indicating a shift in the industry towards more subscription-based services.
2024 BNPL Trends
There are a lot of BNPL reports in market pointing to continued growth in the sector.
- In the U.S. there were 50 million Americans using BNPL services in 2021. That figure is forecasted to exceed 94 million in 2024.
- BNPL is achieving widespread adoption and quickly becoming a payment option standard with more and more customers expecting BNPL availability from all financial institutions and merchants.
- The BNPL global market will be valued at $309.2 billion in 2023 with a CAGAR of 25.5% until 2026.
Image: Insider Intelligence and Fit Small Business
- Millennials are the greatest users of BNPL services (56%) versus GenZ (49%), GenX (36%), and Boomers (26%). Approximately 40% of Buy Now, Pay Later (BNPL) service users fall within the 25-34 age bracket who earn between $20 - $50k annually.
- A growing number of financial influencers (finfluencers) are endorsing BNPL and providing financial advice to Gen Z on social platforms.
- More TradFi institutions are considering BNPL offerings to appeal to younger customers but they need to implement carefully to avoid credit issues.
- Growing sense that BNPL users could eventually replace traditional credit card use. A recent survey found that people spent nearly $700 more on BPL than credit cards in a 90 day period.
- The sector is likely to see more regulation to protect consumers which may encourage new users like the underbanked to dabble in BNPL.
Image: PYMTS and Fit Small Business
Outlook
The outlook for the Buy Now, Pay Later (BNPL) industry, particularly with Klarna's new initiatives, is one of evolution and expansion. As the sector continues to grow, companies like Klarna are exploring new revenue models, such as subscription services, to stabilize and diversify their income streams. The shift towards subscription models like Klarna Plus could signal a change in how consumers engage with BNPL services, potentially leading to increased loyalty and regular use among a dedicated customer base.
See: Amazon & Affirm’s BNPL Service Aids Small Business Growth
The introduction of additional financial products, like high-yield savings accounts, suggests that BNPL companies are broadening their scope to offer more comprehensive financial services. Overall, the BNPL sector appears poised for significant growth and transformation, driven by consumer demand, technological advancements, and strategic shifts by key players like Klarna.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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