BNPL is bumping along as Affirm tests a rewards program and Square integrates with Afterpay in Canada. New BNPL concepts are popping up including donate now, pay later and pet care. US BNPL regulations are bubbling as CFPB examines need for consumer protection and FTC suggests compliance tips for BNPL offers. Read the full CFPB Report and get the highlights in four valuable charts.
Forbes highlights how inflation may increase BNPL adoption. In the UK, research by Hyperjar claims BNPL may have a negative emotional effect on consumers. Zilch’s CEO pans reporting of BNPL loans to credit agencies, although competitor Klarna adopted it and is pushing the UK government for regulations.
Affirm is testing a points-based rewards program to take on credit cards
Affirm is testing a free rewards program in a bid to compete with credit card companies’ popular points programs. Consumers in the Affirm Rewards beta will rack up points as they submit each repayment to the platform. Generally, shoppers will earn one point per $1 repaid, though that could change as Affirm continues to test the feature. Affirm underwrites all of its transactions from the point of sale and tells consumers exactly what they owe and over what time period, without charging late fees. Fast Company
Square sellers in Canada can now offer buy now, pay later through Afterpay
Square launches its first integration with Afterpay in Canada, providing “Buy Now, Pay Later” (BNPL) functionality to sellers using Square’s e-commerce products across the country. The integration will enable Square sellers in Canada to offer Afterpay’s BNPL experience to their customers, helping them attract new shoppers and drive incremental revenue. BNPL payments are projected to grow 63.5% and reach $5.9 billion in Canada in 2022. BusinessWire
6 new twists on buy now/pay later loans
The popularity of buy now/pay later loans is undeniable, as more than half of US consumers have tried a BNPL loan and more than 90% of users report being satisfied with the concept, according to a poll conducted among 2,200 US adults. Other industries — even traditional credit card issuers — see how BNPL loans resonate with consumers. From charitable donations to pet care, here are the areas where BNPL loans have sparked finance innovations. American Banker
Buy Now, Pay Later: Market trends and consumer impacts
In December 2021, the Consumer Financial Protection Bureau (CFPB) issued market monitoring orders to five lenders to provide data on their BNPL loans.2 This market report summarizes that data, individual and organizational submissions to the CFPB, and publicly available sources to provide a review of BNPL’s marketplace importance and consumer impacts in the United States. The report identifies several competitive benefits and risks of BNPL loans. Consumer Financial Protection Bureau
Unpacking the CFPB report on BNPL, in 4 charts
CFPB published a detailed report on its BNPL findings – and there is much that warrants unpacking. Four charts explain. BNPL is sticky – more people are using it repeatedly. Products purchased are evolving from fashion and technology first. Nearly half of the borrower base remains under 33 years old though consumers aged 34-40 and 51-64 seem to be moving towards BNPL. They are paying in four with 89% using debit cards and 10 percent using credit cards. Tearsheet
CFPB targets buy now, pay later lending
On September 15, 2022, the Consumer Financial Protection Bureau (CFPB) published a report analyzing trends in the buy now, pay later (BNPL) industry. In particular, the CFPB finds that the BNPL industry has experienced rapid growth since 2020 and that, while BNPL products offer certain benefits to consumers, the bureau believes that borrowers are receiving uneven disclosures and consumer protections when using those products. No action is anticipated in the short term. Cooley LLP
Buy now, pay later – and comply with the FTC Act immediately
To transform consumers into customers, companies often make a variety of claims about the costs and conditions of BNPL plans. If your business offers BNPL payment options as a retailer or BNPL company, remember that basic consumer protection ground rules of the FTC Act apply. Avoid deceptive or unfair tactics in what you say to consumers, how you convey material information, and how you treat them throughout the lifecycle of the transaction. US Federal Trade Commission
Reporting BNPL data to credit agencies is flawed, says Zilch boss
Reporting buy now pay later purchases to credit agencies, a suggested regulatory policy for the UK industry, may be a flawed concept according to Philip Belamant, CEO of Zilch. He said the reporting of BNPL purchases to credit agencies is designed for credit cards and is not the best way to encourage consumer protection. BNPL giant Klarna implemented this policy on its own in May and encouraged government regulators to move faster. UKTN
Why buy now, pay later usage is changing in the year to come
As inflation rises and market instability increases, it’s unlikely you’ll observe a drop in BNPL services in the near future. Although some providers have come under criticism from the regulators for encouraging short-term lending via BNPL solutions, many continue to successfully do so—demand is increasing. The sector is currently predicted to have a CAGR of 45% by 2030, with its value set to rise to an estimated $3.68 trillion in the next decade. Forbes
BNPL schemes have a negative emotional effect on people, warns HyperJar
HyperJar investigated Brits’ spending habits to find almost a fifth of Brits say their biggest debt comes from BNPL schemes. A figure that even rises to 27% for those aged 25 to 34. Although 19% of Brits say that seeing money stack up makes them feel better, they’re still addicted to spending. This is backed by a separate 2021 study, which found that 42% of 16 to 24 year olds used BNPL schemes, with 57% using this to update their wardrobe, and 47% using it to buy tech products. Fintech Times