Save Now Buy Later – let’s talk about this new trend

Once in a while, various novelties emerge in the FinTech world that, given favorable conditions, transform into a sort of trend. Save Now Buy Later could be called such a new trend if it weren’t for the fact that it doesn’t have much to do with being new. What’s new about it is that it’s increasingly being talked about in the context of being the successor to BNPL. But is it really so? Well, I dare to doubt it.

However, this doesn’t change the fact that the trend itself is very interesting. And personally, I’m rooting for it.

And since it seems to be gaining momentum or will soon have its momentum, I recently decided to take a closer look at it.

Save Now Buy Later – what is it and what’s it all about?

The idea is trivially simple: you want something but don’t have the money for it. You’re not keen on more loans, overdrafts, or other leasing or installment mechanisms. So, you decide to save up for it. And that’s it – that’s SNBL. In a nutshell: it’s a technology streamlining the process of saving money for a particular goal. No debt, no interest, margins, or the like.

Sound familiar? Because it is. We used to call it simply a piggy bank. Or a sock, or a box. It doesn’t matter.

Later on, banks started offering savings accounts, which we often used to save up for a specific purchase. Or other banking products that allowed us to save for a specific goal and withdraw money once we’d saved enough.

But times have changed, and we – people – started getting more and more into debt. BNPLs, installments, leases, credit cards, and other mechanisms facilitating purchases we couldn’t afford at the moment flourished. Until someone finally said stop and came up with the idea that enough with this debt, it’s time to get back to good old saving. And thus, SNBL was born.

Fortunately, it didn’t end with just a regular savings account where we save up for a specific goal. That someone went further and continued to innovate. They combined a regular bank account with modern technology and FinTech mechanisms, added quite decent marketing, spiced it up with partnerships and discounts, fueled it with VC money, and we got a pretty decent dish out of it.

What characterizes Save Now Buy Later?

The mechanism underneath is quite simple. A company offering the SNBL mechanism sets up a bank-like account for the user, where the user can keep their money. Most often, the account allows the user to create sub-accounts for specific purchase goals (e.g., for a holiday trip, for a TV, for a computer). These goals can be quite general (for a holiday trip, for a computer) or more detailed (for a trip to Bali in August of this year, for an Apple Mac Pro M2 Ultra with a 24-core CPU).

Most often, companies offering SNBL are connected to various partners (merchants) who support our goals by offering additional discounts, vouchers, or enabling the purchase of a product once a certain percentage of the total amount has been saved.

And the last important common feature: automation. SNBL assists in saving however it can, automating whatever can be automated – trying to support our saving efforts by automatically setting aside a designated amount to a specific account. Sometimes it’s just a simple reminder and constant prompting (you were supposed to save 10PLN for this trip today, come on, do it), sometimes it’s much more advanced mechanisms (e.g., automatically deducting X PLN from the linked card and depositing it into a dedicated account, or deducting an additional X% from each transaction and saving that X into a savings account).

Models of operation for Save Now Buy Later

From my observations so far, I’ve noticed three main models of operation for SNBL companies:

1. Digital wallet, combined with a kind of marketplace. In short: an SNBL company uses its own or someone else’s payment institution license to open payment accounts for its users. Users collect money in these accounts, and once they reach their goal, they spend this money on purchases from merchants available in the SNBL network.
   
2. Digital wallet + debit card and/or prepaid card for the user. Similar to the above, SNBL opens a payment account for the user and then issues them a card linked to the balance of that payment account. The user saves money in the account, and then has the option to spend it using the card, just like with a normal bank card.
   
3. SNBL payment method. This is somewhat the opposite of the two previous models. In points 1 and 2, the service is directly targeted to the consumer (the person saving money), whereas in this model, the service is aimed at the merchant and/or PSP processing money for the merchant. In this model, the SNBL mechanism is whitelabeled at the merchant, appearing as a payment method offered directly by them. The person using it feels as if this wallet/savings account is being managed directly by the merchant. If they use SNBL at several merchants, they will feel as if they are saving money directly with all of them.

Interesting entities in the Save Now Buy Later area

Sav

Business model: wallet + prepaid card with cashbacks, Visa card

Location: United Arab Emirates

Founding team: Purvi Munot, Mithil Ajmera, Abdul Husein

Founded: 2021

Investors: business angels, Mohammed Bin Rashid Innovation Fund & Accelerator

Monkee

Business model: wallet + Visa debit card

Location: Austria

Founding team: Martin Granig, Christian Schneider

Founded: 2018

Investors: business angels, Squer Invest, Startup Wise Guys, European Super Angels Club, Vereinigte Volksbank Raiffeisenbank

Cashmere

Business model: wallet (dedicated to women, focusing on luxury products)

Location: UK

Founding team: Urenna Okonkwo

Founded: 2018

Investors: ODBA

Hubble

Business model: wallet (mentioning occasionally about cards and gift cards, but it’s mostly just their marketing message)

Location: India

Founding team: Neeraj Tulsyan, Mayank Bishnoi

Founded: 2021

Investors: Sequoia

Multipl

Business model: wallet + auto invest

Location: India

Founding team: Paddy Raghavan, Vikas Jain, Jags Raghavan

Founded: 2020

Investors: Blume Ventures, GrowX Venture, IIFL, Kotak Securities

FlexPay

Business model: wallet

Location: Kenya

Founding team: Dennis Karanu, Johnson Gituma, Richard Machomba

Founded: 2015

Investors: Acacia Group, Lofty Inc, Expert Dojo, Google Black Founders Fund, Renew Capital

Tunzaa

Business model: wallet

Location: Tanzania

Founding team: Ng’winula Kingamkono

Founded: 2021

Investors: Startup Wise Guys

LayUp

Business model: wallet

Location: South Africa

Founding team: Andrew Katzwinkel

Founded: 2017

Investors: Capital Appreciation, Foresight, Breega, Techstars

CDcare

Business model: wallet

Location: Nigeria

Founding team: Odukoya Oluwatobi, Farohun Ayodeji

Founded: 2020

Investors: Future Africa, Volocity Digital, Techstars

Accrue Savings

Business model: wallet + card (supposedly MasterCard, but it’s hard to find mention of it in their marketing message)

Location: USA

Founding team: Michael Hershfield

Founded: 2021

Investors: Tiger Global, Twelve Below, Stonecroft, Ground Up, Box Group, Silas Capital, Maple and more

HyperJar

Business model: wallet + prepaid card (MasterCard), with a strong emphasis on shared spending (e.g., in couples or families, children’s cards, etc.)

Location: UK

Founding team: Mat Megens, Paul Rolles, Robert Rooney

Founded: 2016

Investors: Susquehanna Growth Equity

Savrr

Business model: SNBL payment method for merchants

Location: Germany

Founding team: Nico Gemkow

Founded: 2023

Investors: data not available

Any additional thoughts?

It’s hard not to get the impression that companies offering SNBL services are relatively young in the market, with at best tens or hundreds of thousands of users and/or transactions. It’s still too early to talk about them in the context of huge successes.

The vast majority have raised financing rounds from business angels and VC funds, but in most cases, these are relatively small rounds, at the pre-seed and seed stage. With one exception (HyperJar), which has already had a larger round and can boast a valuation of over $100 million USD today.

Their marketing message is interesting – although many publications pit SNBL against BNPL, you won’t find any mention of that in their messaging. Of course, they emphasize the 0% interest, but that’s it. They don’t portray themselves as anti-BNPL; rather, they position themselves as a modern way of shopping (and this type of message may resonate quite well with the younger generation).

And what’s very interesting in the end… it surprises me a lot that banks haven’t shown stronger interest in the SNBL trend and haven’t started offering these types of services to their customers. One might think this should be a very natural direction for them. Meanwhile, it may turn out that FinTechs will outpace them in the savings area soon.