Highly rated: German white label credit platform brings financial freedom to consumers
If ever there was a stat that showed how fintech innovators are the unsung heroes of everyday life, it is this from Berlin-based payments pioneer Ratepay: 50% of Germans regularly use the business’ technology without realising.
That’s because Ratepay’s platform underpins transactions for a range of major online shops, including Ikea, Eurowings and Flyeralarm, through instant decision instalment payments, open invoicing and direct debit.
To find out more about how Ratepay is making shopping journeys more seamless for consumers in Germany, Austria, Switzerland and the Netherlands, Marqeta interviewed Director of Marketing Andy Mura. This is what he had to say:
Tell us about Ratepay’s origins and the problems you set out to solve.
“We began in 2009 and have been a fintech company from the word go. We used to be a subsidiary of Otto Group but since 2017 we’ve been supported by Advent International and Bain Capital and are now an independent payment brand within the Nexi network. Our founding mission was to become the number one white label payment provider in Europe and our approach is about removing friction from online transactions for both consumers and retailers, in addition to giving people choice about how they want to pay for goods. It’s a philosophy of financial freedom.”
In terms of choice and functionality, what does that look like in practice?
“We make it possible for buy-now-pay-later, invoicing, instalments and direct debit to be embedded directly in the checkout experience, without the need to redirect to another site to complete the payment or log into another account. The big benefit of this is that it keeps consumers engaged with the merchant and makes it easier to wrap personalised offers and rewards around the checkout experience.
“For credit decisioning all consumers have to do is input their email address and our technology pulls insights about that person from a range of sources, including credit score, artificial intelligence and machine learning tools. It means we are able to make an acceptance decision within milliseconds. And from the merchant’s perspective, Ratepay’s proposition is very attractive because we guarantee payment, effectively underwriting the risk.”
It sounds like Ratepay takes on a big responsibility in transactions, what level of risk is there?
“We’re mindful that the risk is very much on Ratepay, so we are very careful about approvals. Ultimately this is about finding the optimal balance, taking into account false negatives and positives. But we also weigh credit risk against the consideration that the bigger the transaction volume the merchant processes with us the more revenue Ratepay generates. So this offsets a lot of risk and cart abandonment is lower with this model. At the end of the day it’s about ensuring both the customer and merchant are happy.”
That’s absolutely fascinating, are others doing it or are you unique in the market?
“Sure there are other products but as far as I’m aware we are the only company that is fully white label. Also to my mind, no one else focuses solely on buy-now-pay-later and transactions in the way that we do. If you were to place us on a ‘fintech spectrum’ we’d be oriented towards the financial side. That said, we’re not a pure finance company because we’re about tech too. Banks are not yet operating in this space either because they don’t have the technology in place and are unlikely to build it from scratch - however this is changing.”
What do you think the future holds for Ratepay?
“I think there are two key developments in the offing. The first is around regulation. Currently, the German market has a strong emphasis on consumer protection and financial regulations, and buy-now-pay-later providers must comply with credit rules to ensure transparency, fair lending practices and clear disclosure of terms and conditions. But we think regulation is going to be strengthened further and this is actually something that we welcome, as we’re operating to a high standard with robust safeguards in place. It’s likely that regulation will lead to some market consolidation.
“The other key development centres around our position in the Nexi group of 20 subsidiaries. There are banks within this portfolio and we’re the only buy-now-pay-later provider. Cooperation within the group is growing so we expect to see an expansion of our services through closer cooperation with banking partners.”
To learn more, visit the Ratepay website here
