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Buy Now Pay Later’s FX Challenge

Unless you’ve been living under a rock, you’ll be aware that Buy Now Pay Later (BNPL) has risen to become one of the hottest offerings in the credit and payments space. But how does it intersect with cross-border purchases and FX?

buy now pay later cross-border FX

Enabling shoppers to spread the costs of purchases over several payments, BNPL provides convenience for consumers, but adding an FX element to this kind of service is naturally complicated as FX rates will change through the BNPL time period.

However, as cross-border purchases represent a significant – and growing – slice of ecommerce, it’s perhaps not surprising that a number of major BNPL companies have expanded their services to support cross-border payments. 

BNPL leader Klarna, which this month became Europe’s most valuable startup, has the biggest offering of the companies we identified. Launched in 2019 and rolled out to all customers by late 2020, this includes support for global payments in 190 markets, with cross-border BNPL services available to shoppers in the company’s 10 core markets. However, Klarna offers no support for currency conversion; merchants can take payments in 12 different currencies, but BNPL purchases must be made in the buyer’s local currency. 

Meanwhile Afterpay, which is known as Clearpay in some markets, has recently expanded its cross-border BNPL offering, while this month ZoodPay launched what it claims is the only cross-border BNPL service in the Middle East. 

With BNPL becoming ever more popular as cross-border ecommerce also enjoys a rise, it’s likely we’ll see more cross-border integration and more sophistication in how FX is handled within these products.

What does it cost to make a cross-border ecommerce purchase?

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