By Aug 2022, 28% of US consumers used BNPL. Two Australian banks plan a crackdown on BNPL loan reporting for borrowers. International Banker looks at the impact of recession on buy now pay later providers. SoFI launches Mastercard’s first US BNPL installments program. Japan’s MUFG acquires fintech Kanmu to intro BNPL while Smartpay Bank Direct uses open banking to implement installment loans.
Sezzle partnered with 230-member Independent College Bookstore Association to launch its payment option for students for books, school supplies and gear. ePayLater hopes to add up to 1 million Indian merchants to its BNPL service within three years. UK lender Creditspring criticized young BNPL users for being “poorly financially informed.” While more financial education is always valuable, the criticism feels self-serving.
The rapid evolution of buy now pay later loans
The pandemic lockdowns created ideal conditions for the runaway growth of instant buy now pay later loans offered online by Affirm, Klarna, Afterpay, PayPal, Zip and Sezzle, among others. But the BNPL phenomenon began to evolve in several directions as the pandemic waned. BNPL loans are still gaining in popularity – 28% of US consumers used a BNPL service by Aug 2022, up from 18% at the beginning of the year, according to Consumer Reports – but funding sources, loan quality and terms are in flux. American Banker
Afterpay crackdown is coming: Two major banks fire warning shots at customers who use buy now, pay later services and want loans
Two major banks are warning Australian borrowers that they are cracking down on the use of Afterpay and Zip when they consider loan applications. Both Macquarie and ING revealed they will consider potential borrowers’ use of ‘buy now, pay later’ (BNPL) services in mortgage and personal loan applications in the New Year. For Macquarie customers, borrowers will have to declare details such as their monthly BNPL repayments and limits. Daily Mail
Will buy now, pay later flourish or fail during the coming recession?
BNPL’s ease of use, and perceived ‘risk-free’ financing, have led to a global lending boom. As of 2022, over 17 million customers in the UK have used BNPL services, almost two-thirds of whom are aged under 40. Meanwhile, Klarna has increased the number of retailers it works with by 59% this year alone. Altogether, this has led to annual industry growth of 50.5% – with UK BNPL services now worth over £23 billion ($30 billion). International Banker
Mastercard’s Aikat: Installments program helps SoFi tailor BNPL to member needs
BNPL’s appeal for merchants lies in increasing basket size amid a pressured macro environment. Mastercard’s Chiro Aikat told Karen Webster BNPL’s momentum has been underscored by SoFi’s rollout, announced earlier this month, of its BNPL product. SoFi is the first bank to launch within the Mastercard Installments program, enabling its members to access installment payment options for qualifying purchases at checkout, both in-store and online. PYMNTS
MUFG to start ‘buy now, pay later’ service with Kanmu acquisition
MUFG Bank will be the first of Japan’s three megabanks to enter the “buy now, pay later” (BNPL) business popular among younger consumers, as it hopes to capture that expanding market. MUFG has seen the need to expand into this segment as young people, overseas and at home, are increasingly dependent on such services. The bank will buy 70% of Kanmu, a Japanese fintech company with unique technology to determine creditworthiness, for about 20 billion yen ($150.6 million). Nikkei Asia
Smartpay uses open banking to streamline BNPL in Japan
Smartpay is using open banking to streamline online installment purchases for customers in Japan. The new Smartpay Bank Direct enables customers to pay for online installment purchases from their bank accounts. It is offered through the company’s network of 67 partner banks in Japan, Smartpay said. This is the second phase in the company’s efforts to promote digital payments in Japan — a country in which 60% of transactions are completed in cash. PYMNTS
New Buy Now, Pay Later service targets college books
Sezzle offers students a payment option with an interest-free repayment period. as College students who struggle to afford their required books each year now have another funding option. Sezzle has partnered with the Independent College Bookstore Association to launch its payment option at 230 college stores in the US and Canada. Sezzle allows students to make purchases, including books, school supplies and gear, and then repay them in four installments. Investopedia
Ignorance ‘at heart of’ BNPL explosion, warns loan provider, amid fears cost-splitting deals will becoming the UK’s next ‘credit trap’ scandal
The rapid growth in the use of BNPL services risks becoming the UK’s next ‘credit trap’ scandal, according to loan provider Creditspring. It said a lack of education and awareness of the potential consequences of high-cost borrowing meant ‘poorly financially informed customers’ were increasingly relying on BNPL as a ‘crutch’ ahead of payday. The report said that 24% of people said they struggled to pay back BNPL loans, up from 15% last year, with 17% missing at least one payment. This is Money
ePayLater, India’s leading startup offering BNPL, aims to add 1M retailers in the next 3 years
ePayLater provides a zero-cost credit solution to SMEs spread across 12000 pin codes in the country and has disbursed over Rs 3000 crores in facilitating inventory purchases. The company works closely with B2B majors like JioMart, Metro Cash and Carry, Flipkart Wholesale, BigBasket etc and also directly with distributors of large FMCG brands. Shoppers pay only after goods are physically received, with a further period of 14 days of interest-free credit. CXO Today