The concern about credit score impact from BNPL is reaching a crescendo as banks fight for the top of the mobile wallet, and the credit score crisis grows in the US, Australia, Asia and other markets. Regulators are wary, and consumer protection groups are ringing alarm bells, but others point to increased financial inclusion benefits.
At the same time, Zip is promoting responsible BNPL loan usage, and the Citi Flex Pay option on Amazon Pay is getting attention from consumers. BNPL continues to trend in financial news, and we expect the wave to keep growing. BNPL surf’s up!
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Digital wallets become a buy now/pay later battleground
The competition in the digital wallet space intensifies as firms increasingly add buy now/pay later (BNPL) options to their platforms. The BNPL sector has experienced rapid growth, attracting scrutiny from regulators, but the option is still popular among consumers looking for more flexible payment plans. However, there are concerns that some consumers could get into debt trouble and struggle to keep up with payments. American Banker
More ‘buy now pay later’ users are seeing their credit scores drop after they miss payments. But are these two things connected?
While many users of BNPL services are aware of the risks of missing payments, some still struggle with their finances after taking out BNPL loans. MarketWatch examines the impact of BNPL on credit scores, noting that late payments on BNPL loans can negatively affect credit scores. Some experts argue these installment loans are a form of subprime lending, while others suggest that BNPL can be a helpful tool for responsible consumers. Regardless, consumers should know the potential impact on their credit scores. MarketWatch
‘We want to be the first payment choice everywhere and everyday’: Zip’s Larry Diamond
The CEO of Australian BNPL firm Zip discusses the company’s plans for growth and expansion. Diamond explains that Zip is looking to expand its presence beyond e-commerce and into physical stores and offer a wider range of payment options. He notes that BNPL has become a mainstream payment option in Australia and is growing rapidly in other markets. Diamond also discusses the importance of responsible lending and how Zip works to ensure that its customers use BNPL services responsibly. Tearsheet
The addition of Citi Flex Pay to Amazon Pay could be a winner for Amazon and Citibank
Amazon Pay has added Citibank’s Citi Flex Pay option to its platform, offering customers another buy now/pay later (BNPL) option. Citi Flex Pay allows customers to pay for purchases over time with a fixed interest rate. The addition of Citi Flex Pay could help Amazon compete with other BNPL providers and drive more traffic to the platform. Meanwhile, Citibank could benefit from increased customer acquisition and a new channel to promote its products and services. Digital Transactions
Australia’s rising cost of living is pushing people to buy now, pay later – but debts are stacking up
The buy now/pay later (BNPL) sector is booming in Australia, with more than 30% of consumers using BNPL services in the past year. While BNPL can provide a flexible payment option for consumers, there are concerns. According to the Consumer Action Law Center (CALC), most people with BNPL debts have exhausted other credit options. Claire Tacon, assistant director of financial counseling at the CALC in Melbourne, says people calling the national debt helpline with a BNPL debt had almost always exhausted other credit options. The Guardian
Consumer debt crisis: Buy now, pay later loan arrears hit record level
NZ is seeing a sharp rise in the number of people defaulting on their “buy now, pay later” loans, with arrears levels reaching record highs. The rise is due to the pandemic, which has left many struggling to make ends meet. BNPL providers like Afterpay and Zip are popular among younger consumers, who appreciate the flexible payment plans and the ability to make purchases without a credit check. However, high-interest rates and lack of regulatory oversight have led to concerns about the impact on vulnerable consumers. Stuff
How BNPL can provide lower-income households with new opportunities
BNPL services have the potential to provide new financial opportunities for lower-income households, according to industry experts. By offering flexible payment options and no credit checks, BNPL providers give consumers who may have been excluded from traditional banking systems access to credit. However, concerns remain about the impact of high-interest rates and the potential for customers to become trapped in a cycle of debt. The BNPL industry is expected to continue growing in Asia-Pacific, driven by changing consumer behavior and an increase in e-commerce. E27
4 emerging trends in the financial services landscape
The financial services industry is undergoing significant change, driven by technology and changing consumer behavior. Emerging trends include the increasing popularity of “buy now, pay later” services; the rise of decentralized finance (DeFi), which uses blockchain technology to create decentralized financial systems; the growth of digital currencies, such as Bitcoin and Ethereum; and the rise of neobanks, which offer digital-only banking services. These trends will disrupt traditional financial systems and provide new opportunities for consumers and businesses. Cryptosaurus
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