Instacash - Buy Now Pay Later fintech software

The initial Minimum Viable Product (MVP) development took 4 months, laying the foundation for a successful, ongoing collaboration. Throughout the partnership, new features have been added to the platform, and Instacash's internal developer team has grown with the help of training from our team. Currently, both teams are working together to drive the project forward.

Instacash, as a financial startup, created a digital banking marketplace that enabled customers to complete the entire lending process online. From the outset, the company envisioned expanding the range of loan products and, as the next step, targeting the consumer credit sector.

The plan was to introduce a feature similar to consumer credit, but with an easier application process, known as “Commercial Loan” (Buy Now Pay Later, BNPL), into the existing loan application interface. The solution aimed to address the problem of customers' increasingly limited disposable income and deteriorating liquidity, making even expenses of a few hundred thousand forints challenging. BNPL allows for the payment of loans for multiple instalments of products purchased online. This financial solution is already widespread in Western countries, with 20 per cent of online purchases in Germany occurring this way, and the Western European average is around 10 per cent. Since this option was not yet available in Hungary, Instacash quickly moved to fill the market gap by introducing the financial product.

There are several reasons for the popularity of BNPL.

The advantages of BNPL include the fact that the application and approval process is entirely online, with decisions being made within minutes. The process incorporates a bank-level customer rating and decision engine, and the process is automated from the merchant's side. The loan amount requested must be repaid in instalments, albeit within a short term (typically 3 months in Western countries), and it is accompanied by favourable interest rates.

In addition, BNPL ensures transparency, as customers can track their expenses and the progress of their instalment payments at any time, even retrospectively.

Adapting this financial solution, which is already popular abroad, to Hungarian conditions posed a significant challenge during the specification process. The construct was developed in a different wage structure, payment system (e.g., weekly payments), and legal environment in the West, and it had to be modified so that both domestic merchants and customers could see its potential. Instacash aimed to address the issue that the process of consumer crediting cannot be fully completed online, the personal loan application process takes at least half an hour, and providing consumer loans of a few hundred thousand forints involves considerable administration.

The BNPL service is based on PSD2: according to the EU regulation, financial institutions are obliged to provide third-party access to their customer data. This made it possible for customers to provide reliable account information directly from their bank accounts (e.g., income, existing loan repayments) to the merchants offering the loan — and the banks behind these merchants.

The BNPL service relied on the features of Instacash's online lending system. In addition to the previously existing Partner Portal and the Customer Application Interface (Application Flow), a Merchant Portal was created, where merchants can register on the platform. After identification, customers share their bank account information electronically. The pre-configured scoring engine then automatically determines eligibility for instalment payments based on these open banking (PSD2) digital bank account history income and debt data. If PSD2 is not enabled, traditional evaluation based on income verification is also possible.

Creating the financial product required not only the development of a new portal but also the establishment of new logic to make the loan applicable to the Hungarian market. In addition to adapting it to the legal environment, it also had to be tailored to local customers in terms of the repayment period and conditions. The instalment period was changed from the standard 3 months in Western countries to 6 months, which merchants, in cooperation with Instacash, can set in the Partner Portal. Additionally, merchants can define the range of products, whether the loan applies to the cart value or a specific product, and set the minimum amount.

Several integrations were carried out during the development of the BNPL service.

The Aggreg8 service provider solution enables Instacash to connect with PSD2. Integrations with external service providers always present challenges, and this was no exception: the sharing of bank account information and the naming of data were not entirely consistent across financial service providers, which needed to be addressed.

Another challenge was that, since there was no test environment available (as it was not possible to open a test account), testing could only be done with a live bank account, which complicated this process.

BNPL uses Barion services to facilitate card payments. After signing the contract, the registered user (customer) settles the first instalment of the loan agreement using the Barion marketplace payment method. For the payment, the system redirects the user to the Barion interface, where they can initiate the payment by entering their card details. In case of successful payment, the system stores the token associated with the card details so that future installment payments can be automatically initiated.

The integration of Comnica ID became necessary for the BNPL service due to digital customer identification (also used by Instacash for its online lending system). This includes video identification, selfie service for contract signing, and the authentication process. The authentication can be completed 24/7, and the entire loan application process takes no more than 10 minutes.

The BNPL solution can be seamlessly integrated in a "white-label" manner into any ecommerce platform engine within 1-2 weeks. Among the domestic leased platforms, LogiNet developed the API for Unas and provided consulting support for the integration process.

LogiNet also integrates the BNPL service into its proprietary Logishop online store, which is already in use by Garmin.

The custom web development was completed within three months, using a waterfall methodology complemented by agile elements.

Even after the conclusion of the project, new development requests have continued to come in, characterized by quick bug fixes and releases during this period.

In 2023, Instacash's instalment payment service won the "Technological Solution of the Year" quality award, and since then, more than 10,000 customers have opted for this solution.

BNPL is now available in more than 50 ecommerce platforms and operates in three countries: Hungary, Slovakia, and the Czech Republic. Furbify has already introduced instalment payments in both its Hungarian and Slovak online stores.

The conversion-boosting role of merchant loans is evident from examples such as Nanomarket, which increased its sales volume sixfold with the new service.

Our BNPL solution has also been integrated into the Logishop platform, first appearing in the Garmin online store. The official distributor of Garmin smartwatches saw a 38% increase in retail sales with the introduction of instalment payments. Another positive development is the 64% conversion rate for BNPL carts, and the BNPL process received an average customer rating of 4.7 on a scale of 1 to 5.

Instacash's journey from a personal loan platform to a market-leading BNPL service provider highlights the power of innovation, adaptability, and collaboration in the rapidly evolving fintech landscape. Through our continued partnership, we've provided an end-to-end solution, allowing Instacash to concentrate on their business goals while together, we deliver a robust, customizable, and compliant platform that drives growth and success in the BNPL sector.