Interview with Stefano Cravero

Lucy James: Can you tell me about Banca Sella, AppPago, the niche you’ve got in the market and the service that you provide? Also share with me the role that you play in the company.

Stefano Cravero: Sella Personal Credit is a branch of Banca Sella, primarily focused on lending.

We provide loans and credit cards through different channels, including e-commerce and in-store. AppPago belongs to a specific market labelled as buy-now-pay-later (BNPL). Currently it’s a niche market, but it’s growing. There was a significant surge across Europe, including Italy, during and after the COVID pandemic.

Buy-now-pay-later is currently unregulated, but changes are expected to come in the next two years.

We are very proud of AppPago because it’s a service that has been developed through a tight collaboration between Sella Personal Credit, Banca Sella and Fabrick which are all companies belonging to Sella Group. I’m one of the product managers at Sella Personal Credit and responsible for driving growth in terms of business and functionality of AppPago, ensuring that our products are aligned with the competitive market and meet merchants’ and customers’ expectations.

LJ: Tell me more about the competitive market of payment solutions.

SC: It’s a highly competitive market with a wide variety of players. Historically, buy-now-pay-later was mainly dominated by fintech companies, not financial institutions. However, traditional banks and financial institutions have now entered this market. Card networks like Mastercard and Visa also offer their own specific solutions for their business partners, and then giant companies like Amazon and PayPal also offer their own (payment) installment solution or digital wallet.

This leads to a competitive, but also diverse market, as each different player has a different background, organisation and core business.

LJ: Given the nature of the market, talk me through some of the pros and cons about the current status.

SC: The installment facility is greatly appreciated by users. Research shows that more and more customers are aware of buy-now-pay-later as an option. Also, for merchants, buy-now-pay-later is a very interesting way to boost sales, because it’s a way to increase the average cart. It’s also a way to reduce the chance that customers will abandon or postpone their purchase.

We strongly recommend that merchants display the buy-now-pay-later option throughout the purchase journey rather than just at the point of payment. The chance offered to pay month by month can influence the overall purchase decision of the shoppers.

Despite the significant growth recorded in the recent period, this market is still unregulated and this raises concerns, especially in Europe, the USA and Australia, about the risks of overspending and its contribution to debt accumulation.

LJ: Exactly. Do you think buy-now-pay-later is ethical? Is it ethical to focus on triggering a higher value final purchase?

SC: These concerns existed even before buy-now-pay-later as lending in general can be considered a way to move people towards higher spending. The Italian market, however, is generally quite cautious, with Italian customers not spending beyond their income. The installment option can encourage purchases that people might not have otherwise made, or which they would have postponed. But, in terms of sustainability, this must always be tied to the customers’ income. It’s also essential for the lender to ensure that the loan can be repaid.

LJ: What’s driven the surge in this field?

SC: A huge part of this has been due to the growth in the e-commerce market, which was accelerated by the COVID pandemic. E-commerce has recorded significant growth and buy-now-pay-later is typically used for online purchases with around 76% of the gross volume associated to these kinds of market.

LJ: So, 24% of buy-now-pay-later is activated in-store?

SC: Yes, in brick and mortar.

LJ: Your description reads that “AppPago will skyrocket your sales”. I’m interested to know: how?

SC: I do say that AppPago can support our merchants, in terms of growth by helping merchants to increase their average cart amount, but also, also in fostering customer loyalty. Research shows that the average cart ranges from 25-40% higher when purchases are made with an installment functionality. Additionally, in terms of loyalty, for example, one of our partners, a leading insurance company that requires a recurring annual subscription, found that 67% of their customers that had paid with AppPago, renewed their insurance with AppPago in the following year. We are very proud of this achievement.

LJ: Ok, so sales increase, loyalty increases, are there any other benefits?

SC: Yes, we all know that one of the main challenges that e-retailers face is cart abandonment,

There are the four ‘p’s of the marketing mix (product, price, promotion and product), and payment is another important ‘p’. Payments are essential for making the purchase journey seamless, and buy-now-pay-later, specifically AppPago, can reduce cart abandonment. Most merchants confirm this trend, and they tell us that AppPago is crucial for optimising their customer purchase onboarding.

Additionally, AppPago allows payments to be split into up to 24 installments, offering great flexibility in terms of number of months for repayments. Merchants can also decide whether to offer the full range of months or a shorter period, depending on how they want to manage their fees and repayments. This largely depends on the sector. In some sectors with higher yields, offering maximum flexibility can be beneficial.

LJ: Are there any back end benefits of AppPago?

SC: In terms of integration, we offer the merchants the chance to integrate AppPago via API or plugin, depending on their CMS providing higher flexibility.

One of AppPago’s key features is its adaptability to different environments. AppPago is available in four different versions: one for in-store, one for e-commerce, one for in-store when the retailer doesn’t have a Banca Sella POS with app-to-app functionality, and one for the hybrid context. It’s important that we meet the diverse needs of our retailers.

LJ: Where do you think the buy-now-pay-later model is going? What’s the evolution going to be?

SC: That will depend on the new European regulations, which all players in the market will need to adapt to very quickly. For Sella Personal Credit, this is a good opportunity, because lending is our core business, and we are already experienced in operating within a regulated lending market. It’s possible that AppPago will need to evolve, to better fit the new context and the new scheme. But the primary goal will remain to guarantee the most seamless checkout experience for shoppers.

LJ: From your point of view as a consumer…  what would you like to see change in the e-commerce experience?

SC: My answer is based on market research. Shoppers often feel frustrated and not properly served when they have a problem, once they’ve completed their purchase. I believe improving the post-sales experience is something that should change.