Social responsibility over profits: Dutch fintech in3 is thinking differently about BNPL

Consumers have long felt that traditional financing options don’t serve them well. This has led to the rise of alternative financing options with buy now, pay later (BNPL) emerging as the most popular.

BNPL has surged in popularity in the retail and consumer goods market and is slowly making inroads in the business credit space as well. However, not all BNPL solutions are equal and in3, a Dutch fintech company based in Eindhoven, wants to make a difference with its socially responsible solution.

From afterpay to BNPL solution

in3 was co-founded by Patrick van de Graaf and Jeroen Janssen en Jos Verkleij in 2016 with the key tenet of social responsibility in place. It initially offered only an afterpay solution but felt there was a need for instalment payments covering higher amounts.

With customers asking questions around the maximum order amount of the afterpay solution, in3 felt a real need to change its business without taking more risk or putting end consumers in difficulty of over credit. Hans Langenhuizen, CEO of in3, says they began offering an instalment payment solution for higher amounts.

The scaleup is now the fastest growing company in the fintech space in the Netherlands and registered triple digit growth during the first quarter of 2022. The company had a humble beginning with initial funding coming from three people including the founders.

However, the company grew rapidly during the pandemic and raised its first external funding from Finch Capital. With the funding, in3 has turned itself into a “click and go experience” that has no hassle for either the consumer or the merchant.

Social responsibility at the centre

The business model of in3 is not only simple but also deeply rooted in social responsibility. At the time of purchase online or in store, the consumer can choose in3 as payment option.

This allows the consumer to pay one third of the total amount directly while the second instalment can be done in the next 30 days and the final in 60 days. All this happens without any additional cost to the consumer.

Once the consumer completes the payment, in3 pays the merchant within 14 days and the merchant pays the scaleup for using it as payment option. Langenhuizen says they only get a small percentage of the flow from the merchant, which is used to accommodate for the risk of non-payment as well as operational costs.

Since in3 does not charge any interest from its users, it also makes sure to only accept those who can pay and uses a state-of-the-art credit risk machine that completes the credit check of a person within 0.2 seconds.

“If a consumer does not pay after 120 days we sell this Non Performing Loan (NPL) to two different external companies. So for us, it is therefore very important to get as few people who do not pay,” says Langenhuizen. “Otherwise we have a loss making business as we do not get any kickback or late payments fees from consumers. So the social responsibility to have less non paying consumers is embedded in our business model and not a marketing call.”

Debt funding becomes a challenge

Langenhuizen says their biggest obstacle was to get debt funding for the growth. He says their excellent product and increased spending during COVID-19 lockdown meant they grew faster than expected. This hyper growth made it challenging for them to explain their proposition to debt funders.

The fact that in3 was only present in the consumer space further complicated their debt funding process. “The outcome was that we took some more time than expected but we got over 4 times more debt funding than we initially asked for which helped us grow fast from that date on,”

Peer learning through the Rise programme

Every year, Techleap.nl brings the most innovative Dutch scaleups together as it helps them reach the next level. in3 was one of the ten scaleups to join the batch #9 of this programme and Langenhuizen says the Rise programme turned into a peer learning exercise for the company.

He says the programme served as an opportunity to “talk and get advice from peers” who have already gone through different stages of getting companies to the next level. With the Rise programme, he says they now have insights which were previously not available due to the experience of former or current entrepreneurs.

Eliminating hustle of payment

Hans Langenhuizen took over as CEO of in3 on 1 June, 2020 and since then, he has steered the company towards building a payment platform that eliminates hustle. In order to get there, Langenhuizen has filled key roles in his management team, including that of CCO, CFO, and COO.

He says these positions looked a “bit over the top at first” but helped set the company to meet big growth ambitions without complications. “The hiring went very well as we hired people we already worked with before,” he says.

With the management team in place, Langenhuizen is now focussing on expanding the proposition of in3 to new countries and pushing harder on B2B solutions. The growth will [continue to] be faster than expected.”

The goal, however, does not change for Langenhuizen or the in3 team. They really want to “put the needle of social responsible payments to the right side.”

Langenhuizen says social responsible payment that puts less stress on the consumer will become common. With in3, he envisions “a payment system where you can pay how you want, when you want to, with your own preferred method in every country, without feeling the pain of standing in line or even the hustle to get a payment done.”