Buy Now, Pay Later: risks and opportunities for credit card Issuers

New White Paper: Buy Now, Pay Later: Risks and Opportunities for Credit Card Issuers

BNPL is in the headlines as the format takes off globally. Accelerated by the global pandemic, consumers worldwide have adopted online shopping habits – with pay later a convenient, digital payment route for shoppers and retailers. Although instalment-based lending is not new, positioning at POS for smaller-ticket items on a three- and four-instalment basis is an innovation. Commonly known now as BNPL, it received a boost when cashless payment methods surged with Covid's onset.

In recent quarters, the market reached a turning point; tech giant Apple and traditional card issuers began rolling out instalment-based lending products. The first half of 2022 saw BNPL startups meeting serious economic headwinds for the first time, and investor perceptions of this sector shifted as they come to see the pioneers for what they are: consumer lenders rather than popular shopping apps.

Although the mood is shifting, consumer take-up shows that there's no doubt that instalment-based lending is here to stay.

This white paper examines:

• What the pay later boom means for credit cards,
• What we can expect in coming quarters,
• The regulatory situation around the world,
• How incumbent consumer finance has been responding and
• The increasing move by leading challengers to provide a personal finance superapp (or faux-superapp) solution.

The paper also includes case studies of Australian BNPL and Apple Pay Later. We focus primarily on BNPL loans rather than the wider category of POS financing that includes larger amounts and generally involves terms of 12 months or longer and interest charges.

Download the white paper: Buy Now, Pay Later: Risks and Opportunities for Credit Card Issuers