South African Andrew Katzwinkel, our latest guest on the BIG5D Podcast, is trying to shake up buy now, pay later with a relatively new alternative payments model called “save now, buy later” or SNBL for those fond of acronyms.

For those few of you not yet in the know, BNPL lets consumers take immediate possession of goods they will pay for later through installments. SNBL is BNPL’s stern, responsible cousin. SNBL still facilitates buying cool things like furniture and jewelry. But you have to make your last payment before you can take possession of the chair or the necklace.

Vega graduate Katzwinkel got his entrepreneurial start with FOMO, an online travel agency that facilitated installment payments for travel adventures, allowing everyone in a friend group to make that destination wedding after all, as an example. Then came COVID.

FOMO’s payments technology ended up providing the backbone for LayUp Technologies, Katzwinkel’s current company trying to flip BNPL on its head via SNBL.

On the podcast, Andrew argued that SNBL is better suited to the South African economy, where the financial system is sophisticated yet many consumers live on cash. Also, Andrew noted that a large percentage of South African consumers are not fully included in the financial system and are not considered credit-worthy.

“We have taken a bit of longer-term view and identified a much larger market whereby we can serve them through a save now buy later model,” Andrew says on the podcast.

Andrew and others in the SNBL space (for example, U.S.-based Accrue Savings) like to point out that SNBL is savings, not credit. This is an important distinction from BNPL, as Andrew drives home in this episode.

We hope you enjoy the interview. You can view a video version of this episode on our YouTube Channel.

Interview Excerpts

The following are a few excerpts from our conversation with Andrew. Please listen to the podcast or watch the video to fully experience the interview.

Why is Save Now, Buy Later (SNBL) better suited to the South African market than Buy Now, Pay Later (BNPL)?

If we look at the total addressable market [in South Africa], there's actually a majority of our population that actually sits in the non-credit worthy consumer base, and therefore really, when you look at our active credit users, which is really a lot of players all kind of going after the same consumer base, it's very crowded. And it's and it's a diminishing number.

We have taken a longer-term view and identified a much larger market whereby we can serve them through a save now buy later model. This is a low-risk, interest-free savings vehicle where people are deferring the collection of the item but have the flexibility to pay the way that they want and to amend, cancel, or extend those payment plans.

What are some key differences between SNBL and BNPL?

If you're doing a like-for-like correlation between BNPL and SNBL, is that a lot of our customers are saving towards much higher value purchases, where BNPL wouldn't really be in that category of you know, a much more immediate gratification type item.

So when you look at things like engagement rings, to even things like funeral plots here in South Africa, these are very high-value purchases, for which consumers can now set up an interest-free solution whereby they can pay over a much longer term. This also taps into your foreigner market, your Gen Z market that hasn't yet actually got a credit rating…and then your non-creditworthy customers, which is a large number of people in South Africa.

And so it's really focusing on trying to shift the behavior of consumers to say, look, there, there is an alternative to credit. And this is a solution that will allow you to pay really over a period of time in the way that you want to.

As a young African tech founder, what advice do you have for others who are considering entrepreneurship?

First, if you're not willing to get off your chair to try, you're never going to know. If you just talk about your idea and you get this positive feedback, but you have no kind of real willingness to actually make it happen, then it's never going to happen. So how strong is the idea? How strong is the why? If that why is strong enough, then you need to get off your chair to make it happen.

I think the second part would be to realize the importance of creating a strong founding team from the beginning. And everyone has got different skill sets within running a company and you need to identify what are your strong skill sets And then what are the complementary skill sets that you need around you in order to actually put together a strong founding team?

And then the third one would be like, it's a hell of a roller coaster. So enjoy the ride. You're going to go through massive ups and massive downs. And the ups make it worth it. The downs can be some very dark days.

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Andrew Kastzwinkel will also be a speaker at the upcoming BigFive Summit, 15-16 March, at the Radisson Blu Waterfront Hotel in Cape Town.

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