Tag: Financing platform

Cash vs. Credit Card vs. Consumer Financing 2023 Trends

Posted on by chargeafterdev

With the advent of more sophisticated consumer financing technologies and services, consumers have more options to pay for goods and services, resulting in new spending trends. 

While credit cards are still a primary method of unsecured borrowing for US consumers, their use is declining, especially with the millennials and Gen-Z. Young Americans are also less likely to use cash; data from the Federal Reserve reveals that 35 to 44-year-olds only pay for 13% of their purchases in cash. 

According to McKinsey, the decline in credit card use has partly been attributed to the rise of buy now pay later (BNPL), which has been adopted by 37% of Gen-Z. As interest rates and prices rise, consumer financing at the point of sale rises. In the first quarter of 2023, ChargeAfter saw a 55% increase in point-of-sale (POS) financing applications. 

This article explores how consumers are shifting their payment habits and what this means for merchants.

Cash 

Since the early 2000s, there has been a global shift towards a cashless society, especially with the rise of mobile and crypto wallets. The US lags behind countries like the UK, Norway, China, and Canada in digital adoption. According to data from the Federal Reserve, 20% of transactions in the US are still made in cash. It’s worth noting that the average cash transaction is $22 compared to $112 for credit cards, indicating that it is primarily used for small transactions. In 2022, Pew Research reported that 41% of Americans said they make no purchases with cash in a typical week, compared to 24% in 2015.

cashless economy consumer financing

** PEW Research Centre

Credit Cards

Research by GlobalData in 2022 indicates 47% of Americans under 35 do not possess a credit card, compared to 39% in 2016. Overall, credit cards remain popular and accounted for 40% of US purchases in 2021, according to Statistica. In July 2023, the Federal Reserve published that 20% of US loans were rejected, suggesting that higher interest rates make it more difficult for Americans to borrow. The Fed raised interest rates seven times in 2022, and the average credit card interest rate in the US is almost 25%. For shoppers with a low credit score, the average APR is around 27%, meaning shoppers are looking for an alternative. 

POS Financing

As the technology to underwrite at the point of sale has been developed, multiple POS financing products have become available, mainly driven by fintech companies. These lenders offer diverse loans, including 0% APR, long and short-term instalments, revolving credit, B2B financing, lease-to-own, and BNPL. According to a survey by LendingTree, POS financing services rose by 12% in the United States between 2022 and 2023 and are popular across all age groups. This form of consumer financing allows customers to obtain instant financing at their moment of need, often providing better terms and greater flexibility than a credit card. Data from ChargeAfter shows that the amount shoppers spent using financing increased by 53% in the first quarter of 2023 compared to 2022 in the US.

The Future of Consumer Financing

The trend towards point-of-sale financing will continue as younger generations reject credit cards and consumers face high-interest rates. As financial technology continues to evolve, the potential of consumer financing is fast growing, suggesting an increasingly integrated and versatile financial landscape.

While cash is straightforward and carries no debt, it lacks the security and reward benefits of credit cards and is quickly replaced with tech-centered payment solutions. Credit cards offer flexibility but can lead to high-interest debt and are unpopular with young people. Consumer finance delivered through a POS financing platform that supports multiple lenders and is embedded into omnichannel customer journeys is fast being adopted by retailers to give their customers financing choices anywhere they shop. 

 

References

https://moneytransfers.com/news/2023/02/03/cash-vs-credit-card-spending-statistics

https://fortunly.com/statistics/cash-versus-credit-card-spending-statistics/ 

Over 20% Of U.S. Loans Rejected In Last Year—Hitting 5-Year High (forbes.com)

https://20831387.fs1.hubspotusercontent-na1.net/hubfs/20831387/e-books/The_High_Cost_Of_Low_Approval_Rates%20(6)%20(1).pdf 

https://moneyzine.com/personal-finance-resources/cash-vs-credit-card-spending-statistics/ 

https://www.pewresearch.org/short-reads/2022/10/05/more-americans-are-joining-the-cashless-economy/

Free Consumer Finance Retailer Insights Survey 2023

Posted on by chargeafterdev

The rapidly evolving retail financing landscape presents new growth opportunities for merchants looking to expand their businesses.

Providing an omnichannel experience for consumer financing options is becoming increasingly important. With implementing a consumer financing platform a priority, it is crucial to manage the financing cycle and integrate with in-store point-of-sale systems. In this article, we will outline key points based on ChargeAfters’ Retailer Survey on the State of Consumer Financing related to retail financing and the implications for merchants in 2023.

 

 

What is in the Survey

Explore a range of retailer priorities on consumer finance, including:

 

Demand for Consumer Financing

Find out the importance of consumer financing and retailers’ take on consumer demand for POS financing.

 

Consumer Finance Approval Rate

In the survey, we assess the frequency of customers who walk away with a poor customer experience and lost revenues for the business and how statistics are a problem for near-prime and subprime customers.

Merchants find this information critical for expanding their financing options to remain competitive. Learn about the importance of Retail financing options such as in-store financing, checkout finance, and payment plans and how these can help merchants offer financing solutions that meet the needs of their customers.

 

Demand for Expanding Consumer Finance Lenders

Retailers want to serve the entire credit spectrum better and add to their lender portfolio. See how important it is for retailers to add B2B lenders, tertiary lenders (also known as a third-look lender), and secondary lenders to their financing portfolio.

The survey reveals how the drive to broaden the variety of options for consumers translates directly to improving the customer experience and revenues for the merchants, who are currently leaving money on the table.

 

Importance of Implementing Consumer Finance

End-to-end management of the financial cycle is crucial for financing platforms. Retailer insights reveal retailer priority on implementing a consumer financing platform and the range of essential considerations required, like, how the platform should manage the financing cycle, from reconciliations to chargebacks and dispute resolution, the ability to integrate with in-store Point-of-Sale, offering an omnichannel experience and connectivity to various lenders.

 

How vital is Consumer Experience & Omnichannel?

Providing omnichannel financing options is vital for most merchants, but smaller merchants must catch up. Today’s consumers often require an omnichannel experience when utilizing consumer financing and BNPL tools. The survey shows the importance of consumer experience and omnichannel from the retailer’s perspective.

The data paints a picture of consumer finance as an increasingly critical function in the business, linked to customer experience, revenues, and business growth. With technology investments and expansion a priority, merchants ask themselves – am I remaining competitive enough to support the business and my customers?

 

 

Conclusion

Download the FREE survey to gain insight into retailers’ demand for consumer financing, particularly for lower-priced items.

Find out what retailers need to improve customer experience and revenue and how crucial it is for merchants to provide an omnichannel experience for financing options. In the survey, learn how consumer financing is becoming an integral part of the customer experience, with some retailers creating a unique function for BNPL and consumer financing options.

As technology investments and expansion become a priority for merchants in 2023, they must remain competitive enough to support their businesses and customers. By understanding and addressing these critical findings in our survey, You can see how merchants can leverage the advantages of financing and capitalize on the growth opportunities offered by the rapidly evolving retail financing landscape.

Consumer Buying Trends Survey – The Importance Of Consumer Finance

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Furniture industry research specialist Dana French conducted the Consumer Insights Now research, which was released in September and was co-sponsored by ChargeAfter. The consumer finance study highlights customer behaviors across age groups (18-74). The primary goal of the research was to identify customer preferences and trends which would provide furniture sellers with useful information.

The survey provides data on how buyers often use consumer financing in a variety of ways. The research’s results include the kinds of goods they want to purchase, how they intend to finance such purchases, and how the furniture fits into their overall shopping list.

The research gives furniture retailers all the information they need to know about customer trends right now. For both new and established retailers looking to offer the precise services that customers want, the data may be of tremendous assistance. Especially when the study displays a variety of consumer behavior statistics.

The study emphasizes once more how essential consumer financing has become to our daily lives and how it affects every significant purchase made by a customer. Numerous survey results show that younger customers are more inclined to utilize consumer financing in their everyday life which is evidence that retail finance has become popular in recent years.

The survey’s findings could help retailers understand the value of customer financing in the furniture industry. It may be a signal for them to introduce additional buy-now, pay-later (BNPL) loans or POS financing alternatives.

The results of the survey also revealed which age group is the most significant group of consumers and which of them must be the primary category of potential customers. As a result, the data may be used by retailers to create a precise marketing strategy for upcoming sales and ensure that customers will have access to the financing choices they require. When properly applied, research may boost sales and conversion rates for shops.

 

How Consumers Plan To Pay

consumer financing how consumers plan to pay

According to the chart above, different age groups have different plans for how they will make their payments, or use consumer finance solutions. Although the numbers for customers who use credit cards and those who prefer to pay with cash are practically identical, we can see that younger groups are slightly biased towards cash payments. Due to their familiarity with traditional banking services and installment payments, older generations are more inclined to utilize credit cards for payment.

In contrast, younger Millennials and Gen Z tend to choose Buy Now Pay Later services from financing platforms when it comes down to consumer financing options available to them.. There are two potential causes for this. Namely, younger consumers may like BNPL since it offers superior services and the benefit, occasionally, of no interest charges, or are often unable to qualify for credit cards because they do not yet have a solid credit score. Similar considerations apply to cash payments, which are often made from savings accounts and are more frequently made by older generations.

 

Are Consumer Financing Options And Promotional Terms Important To Consumers?

Consumer financing what triggers consumer purchase decision

 

consumer financing importance of checkout financing options

Promotional terms are significant to 49% of customers overall for home goods, whereas financing options are important to 43% of customers when we compare how financing choices and promotions trigger the purchase for the consumers. The younger generations of Gen Z are the only age group, as shown in the table above, that is more likely to make a purchase when the shop offers financing choices at the point of sale. However, this is not true for other age groups. Only 27% of Baby Boomers believe that financing alternatives at the store are the reason to make a purchase, according to the lowest numbers for consumer finance.

Though the comparison is close across practically all age groups, younger generations are more influenced by both possibilities and are more likely to purchase as a result. As we can see, promotional conditions are an excellent instrument for boosting sales and luring customers. Conversely, the businesses that choose to use both of the proposed solutions will succeed the most and draw in the most number of customers.

As shown, the Consumer Insights Now consumer finance survey provides the exact data and facts furniture retailers require to develop effective new tactics and know which consumer financing solutions to use.

 

References:

Consumer Insights Now research, Home News Now (September 11, 2022) Consumer Insights Now: Research highlights consumer buying behavior in the second half

Buy Now Pay Later (BNPL) Stats for 2022

Posted on by chargeafterdev

Consumers are increasingly turning to Buy Now Pay Later (BNPL) or POS financing to purchase items or services and spread out their payments over  time with a preset payment plan.

A recent poll found that during the COVID-19 outbreak, 60% of participants used a buy now, pay later service. 66 percent of respondents stated that they believe adopting buy now, pay later services to be “financially dangerous” at the same time. This is probably because services that let customers purchase items now and pay for them later might lead to overspending. Services that let you buy now and pay later may give the impression that an item is less expensive than it is. If shoppers indulge themselves, they could accumulate more credit than they can manage.

Important Data for BNPL

In 2022, there are expected to be 59.3 million BNPL users. The amount of BNPL customers has been sharply rising over time, driven in part by the financial difficulties associated with COVID and in part by the proliferation of BNPL businesses.

This line of credit is adaptable and simple to qualify for. For example, 45% of customers said they picked BNPL because paying with it was simpler than using a credit card, while 44% claim they did so because it offers more flexibility.

BNPL Use by Age

 

Age

 BNPL User Percentage

18-24

61%

25-34

60%

35-44

61%

45-54

53%
54+

41%

 

BNPL Use by Average Household Income

 

Average Household Income

 BNPL User Percentage

>$35,000

39%

$35,000-$49,999

47%

$50,000=$74,999

50%

$75,000-$99.999

43%
>$100,000

41%

 

People between the ages of 18 and 24 and 35 to 44 are the most likely to finance BNPLs. In general, younger age groups utilize BNPL more frequently. The income range of $50,000–74,999 is the one most probably to use BNPL. Customers in this range and those above it utilize BNP at around the same rates.

According to the most recent statistics, BNPL loan usage decreases as income and age rise. However, the trend suggests that this pattern is changing, and more and more individuals are beginning to use BNPL lending, which is hurting traditional banking products.

 

Top Reasons for BNPL Usage

 

Reasons to Use BNPL

Percentage of Users

Out of Budget Purchase

44.98%

Avoiding CC Interest

36.92%

Borrow Money

24.73%

Avoiding to Share Personal Data

20.79%

Credit Card Alternative

19.18%

Reached Credit Card Limit

17.2%

Can’t get CC

14.16%

No Bank Account

7.71%

Other

5.73%

 

Generally, purchasing clothing and electronics is the most frequent usage of a BNPL plan. The most frequent reason for selecting a BNPL plan is to make an expensive purchase.

Amounts People Owe to BNPL

 

Amount owed

User Percentage

Less than 100

28%

101-250

18%

251-500

25%

501-1000

17%

1001-2500

9%

2501-5000

2%

More than 5000

1%

 

BNPL Companies

 

Not just businesses and consumers benefit from BNPL loans; BNPL service providers also make significant profits. Even if the majority of the top financing platforms don’t charge consumers any additional fees, they nevertheless make money from the merchant companies that use their services to run their online storefronts. Simply defined, BNPL services are simple to use, but difficult to produce and secure. As a result, rather than developing a new system on their own, retailers employ the established and reliable financing systems of BNPL companies to increase their sales and conversion rates. Additionally, it draws a lot more customers overall.

Instead of just employing basic BNPL services, merchants and retailers are increasingly turning to the newly created and deployed BNPL white label services. Retailers can adopt BNPL services and do so under their name by using ChargeAfter’s white-label services. They get considerably better outcomes from branded BNPL solutions, which also improves the reputation and overall attractiveness of their business.

 

ChargeAfter’s BNPL Financing Platform

 

ChargeAfter’s  Waterfall financing increases the chance of approval  —  up to 85%.

As a result, merchants and financial institutions are using ChargeAfter’s BNPL white-label services to increase customer retention and maintain a competitive edge in the consumer financing sector.

Additionally, ChargeAfter is constantly improving and working to provide its merchants and banking partners with the best and most up-to-date services. According to Meidad Sharon, CEO of ChargeAfter, in an interview with Fintech Blueprints, the system is updated at least montly, and by the end of this year, they intend to increase the number of lenders to further ensure that every customer can get the financing they need.

References:

Haughn, R. (2022, July 8). 2022 Buy now, pay later statistics. Bankrate. https://www.bankrate.com/loans/personal-loans/buy-now-pay-later-statistics/

 

Want to learn more? Reach out to us here.

Finovate ‘Best BNPL Finalist’: ChargeAfter

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The global lending platform of ChargeAfter is up for the title of best BNPL solution. The fact that ChargeAfter is a finalist among other financing platforms demonstrates once more that the non-stop development work being done to build the best financing system and offer retailers the best BNPL (Buy Now Pay Later) services are succeeding, and the ChargeAfter financing platform continues to hold the top spot among the industry’s pioneers in both the consumer financing and BNPL sectors. There are several factors, which we will go through, that make ChargeAfter’s lending platform a finalist for the Finovate awards and a strong contender to win the competition as well. Firstly, let’s discuss what is Finovate and Finovate Awards.

 

About Finovate

 

Finovate is a technology firm for financial services that was founded in 2007 and has since grown and extended internationally. It is a business that organizes conferences only for the purpose of displaying the greatest and most cutting-edge new bank and financial technologies. To address topics and subjects pertinent to local and international financial markets, Finovate expanded its approach. Leading financial and traditional executives typically attend huge, highly effective audiences at Finovate conferences. Informing consumers and delivering news about new, powerful Fintech companies and banks is another one of the company’s primary responsibilities. It has emerged as the primary source for individuals to learn about breaking financial news.

 

About the Finovate Awards

 

In addition to other services and conferences, Finovate also hosts the Finovate Award Ceremony, where smart and innovative businesses are recognized.  More than 25 categories, including Best Fintech Partnership, Best Mobile Payment, and Best BNPL Solution, in which ChargeAfter’s financing platform is also nominated, honor fintech businesses and banks.

 

ChargeAfter: The Nominee for the Award

 

No one was surprised to see ChargeAfter among the finalists for the best BNPL solution award because the financing platform has advanced quickly this year. ChargeAfter’s global lending platform was nominated for the Finovate Awards primarily due to its growing market acceptance, development of new connections, and expansion of its core advantages.

Many merchants have recently found ChargeAfter’s BNPL lending services to be appealing and have embraced them, which has improved their performance and revenue. The ChargeAfter BNPL platform improves conversion rates for merchants and increases sales as well.

Along with providing services to shops, ChargeAfter has also assisted banks in keeping up with the quick development of consumer finance and Buy Now Pay Later services. Fortiva Retail Credit expanded its collaboration with ChargeAfter this year after seeing a significant improvement in its business. It also encouraged other banks to try and use ChargeAfter’s BNPL white label services, which have been altered to meet the requirements of any retailer business or bank.

The Financing platform is constantly evolving, and as ChargeAfter CEO Meidad Sharon stated in an interview with The Fintech Blueprints, the company has plans to expand the number of lenders on the platform to make its standout feature, Waterfall financing, which is full of reliable lenders, even more, powerful and provide consumers with guaranteed financing opportunities.

 

Want to learn more? Reach out to us here.

Why ChargeAfter Launched a White-Label BNPL (Buy Now Pay Later) Service

Posted on by chargeafterdev

Financing platforms must create new services or integrate existing ones to stay up with the demands of merchants and customers in the market as modern consumer financing develops quickly. Given the intense competition in the market and the growing popularity of BNPL lending, it is difficult to stay on top without modernizing the financing system and providing the highest level of customer service. That has become the reason why the leader in consumer financing, ChargeAfter, has decided to implement BNPL white label services.

 

What is the BNPL white label?

 

The company can employ consumer finance in its e-commerce store and brand it under its name when using the BNPL white label services provided by the financing platform. Simply put, the retailing business can make its operation appear more professional and can do so in the simplest method imaginable. Instead of spending a ton of money developing a new finance system, retailers may now provide branded POS financing services by just utilizing the existing model.

 

Why did ChargeAfter adopt a White-Label service?

 

As the market becomes more competitive, more BNPL providers are attempting to gain an advantage by introducing fresh services that rival BNPL providers do not. Additionally, BNPL white label has grown in popularity among both consumers and merchants, and since ChargeAfter’s lending platform has always given customers the best services possible, the company decided to implement white label services as well. This will keep merchants informed about the consumer financing industry and allow them to enhance their performance. Retailers are now able to get greater results and rise to the top of the selling sector thanks to BNPL white label, which has its advantages.

 

Benefits of BNPL White Label

 

BNPL white label has advantages of its own, much like other consumer financing features. With many BNPL benefits in general, we can go over the following three advantages of white label services:

 

1.    Makes your Business Well-known and Reliable

 

White label services, as we already established, are branded with the firm’s name, giving the company a more trustworthy appearance in the eyes of the customer. As the corporate name is less easily recalled than the lending system itself, when customers use consumer financing without a white label, it is typically a one-time transaction. The reason for this is that customers search for the best BNLP lending option rather than the store itself because the financing platform is the one that specifically allows customers to divide their payments, and customers prefer to select the right platform rather than search for the right store online. So, branded finance software will increase customer loyalty and brand recognition for your business.

 

2.    Makes the Financing Experience Better

 

When a customer wants BNPL services at the point of sale, they are typically referred to the websites of various financing platforms, where they may have to spend a lot of time filling out numerous forms to obtain the funds they require. In the case of the BNPL white label, the customer fills out the application on the e-commerce website. In particular, when using ChargeAfter’s white label services, the merchant can be confident that the customer will receive credit for the purchase because ChargeAfter provides them with a number several lenders from which the system will select the most appropriate option for their needs.

 

3.    Boosts Sales and Conversion Rate

 

As was already mentioned, white label services provide a better user experience, which may be a key factor in reducing cart abandonment and increasing traffic to your websites. By utilizing ChargeAfter’s BNPL white label services, your business can provide the greatest experience to the consumer, which will naturally have a favorable impact on sales and conversion. Buyers want simple financing and a shopping experience.

 

Summary

 

To sum up, ChargeAfter’s global lending platform has adopted BNPL white label services to stay up with the industry’s rapid expansion and provide the best BNPL lending services to retailers. As consumer finance is becoming one of the main ways to purchase items or services, ChargeAfter makes it possible for consumers to buy things online in the best way possible.

 

Want to learn more? Reach out to us here.

White-label BNPL: What is it?

Posted on by chargeafterdev

 

A consumer financing option called BNPL (Buy Now, Pay Later) allows customers to buy goods or services and spread out their payments over time according to a pre-set payment plan. BNPL services are mostly offered by lending and financing platforms at the point of sale.

When a product or service is created by one company and branded under the name of another, this is known as a white label. BNPL white label service is offered by the financing platform of ChargeAfter.

 

Benefits of BNPL White Label

The most effective POS lending platforms are made available to customers by merchants with a white labeled multi-lender, BNPL  platform. Merchants can boost their sales and build consumer trust by using ChargeAfter’s white label product  —  as well as get the best and most modern financing software solution for their stores, both online and off.  Additionally, ChargeAfter’s multi-lender network and consumer financing platform is available for banks, acquirers, and other financial institution to implement white label services and provide BNPL consumer financing to their merchants.

 

Customizable White Label Services

ChargeAfter’s turnkey, BNPL white label platform is customizable for banks, acquirers, financial institutions and merchants, meaning that they can brand and offer our BNPL consumer financing platform as their own.

The platform is made up of many parts that may be adjusted without requiring the development of a new solution. Want to learn more? Schedule a demo or reach out to us here.

 

Want to learn more? Reach out to us here.

Why banks should adopt “Buy Now Pay Later” (BNPL)

Posted on by chargeafterdev

 

Buy Now Pay Later (BNPL) has emerged as one of the most popular trends in open banking, digital lending, and retail, with an expected projected value of $3.98 trillion by 2030. Big businesses are making money by allowing customers to make fast purchases without having to deal with the discomfort of paying for them right away. With such a profitable market and enormous potential for future expansion, banks must follow in the footsteps of the BNPL sector to avoid being left behind. Buy now, pay later, also known as shop now pay later services, is quickly replacing the conventional technique of getting bank credit, a personal loan, or a debit card to buy high-value goods or services.

Buy-now-pay-later (BNPL) is currently the fastest-growing online payment option in many economies as a result of the convergence of digitization, past years’ pandemic accelerated transition to online purchasing, and the growth of younger, active consumers. Customers appreciate having the option to make an immediate purchase and spread out their payment over multiple installments with no fees or interest if made on time. Additionally, BNPL is attractive to retailers as a technique for boosting sales and converting more customers.

Banks are getting ready to adopt buy now, pay later (BNPL), potentially in a significant way. More than 40% of consumers prefer to use BNPL choices from their banks rather than those offered by other businesses, but there is a need for urgency. Banks, meanwhile, have gotten into the game quite late, which makes it hard for those financial institutions to dominate the BNPL market and be better than already successful companies.

BNPL Popularity is Still Increasing

 

BNPL first grew in size in Australia and New Zealand before fast escalating in Europe, where the key brand leaders have emerged. In less than a year, the market in the UK increased to five million users. The US took longer to adopt BNPL, it is currently forecast that growth will meet or exceed that of some regions of Europe, with a predicted compound annual growth rate (CAGR) of 20.7 percent from 2021 to 2028.

These days, more people are using Buy Now Pay Later. Since 2019, the use of BNPL and POS financing has increased thrice in the US. Even though younger people tend to use consumer financing, in previous years all age groups have used it. There have been some misconceptions that BNPL financing is more popular with consumers who have lower income levels; however, recent figures indicate that popularity is rather evenly distributed across all income level categories. The BNPL option is more appealing to people with lower credit scores.

 

 

The Risks of Unregulated BNPL Services

 

Many European nations already have laws prohibiting credit or retail websites. Due to the clients’ massive debts to several BNPL financing platforms and the fact that the majority of them were not subject to any rules, the Consumer Financial Protection Bureau launched an inquiry in the US last December.

The BNPL model also causes the regulators to have a lot of concerns. When consumers used BNPL for their payment plan, we can see that in the cases of consumer financing for merchants and merchant financing for customers, 25% of the revenue for financing platforms came from missed payments. Another major issue is the lack of customer credit transparency. According to statistics, 10% of bank clients who used BNPL were already behind on their payments.

Banks Should Be More Active on the Market

 

Due to the fact that the majority of BNPL businesses that offer consumer financing to retailers are not facing federal banking requirements. It is obvious that those unregulated finance platforms, which issue consumers with an increasing number of debts, will expose them to risks over time.

Unregulated BNPL enterprises are already a problem and are facing opposition in several countries, like Australia and UK, because they provide customers with a variety of point of sale financing alternatives that, in most cases, leave them with enormous debts they may not be able to repay.

As it will be profitable for them to gain more clients and give them the opportunity to become industry leaders in BNPL services, this is the part where the banks should play a role. It will also be crucial for future customers, as it will help them avoid the risks of massive debt from unregulated consumer financing platforms.

How are the banks better? Because banks are regulated, both consumers and retailers can feel secure when breaking purchases into payment agreements.

Banks will need to decide whether or how they want to enter this industry as BNPL continues to grow. If they will not participate on time and delay their actions, they may be left without a huge number of customers with various credit demands.

How Can Banks Dominate

 

When merchants realize there are better and more secure choices available, they will switch to banks. Banks have the ability to plan for the future and play the long game. They can also modify consumer financing for small businesses to increase their clientele from numerous companies. Smaller merchants will be pleased to collaborate with financial institutions as well since this will help them avoid being burdened by bad BNPL debt.

Although fintech is currently more popular in the market, there are some steps with which the banks can overtake them. Due to the fact that traditional lenders can provide significantly better interest rates to both businesses and consumers, other Buy Now Pay Later services will also drop their interest rates.

Point of sale financing can also be available to BNPL banks. Numerous banks in Latin American nations have adopted BNPL at the point of sale using credit cards. Because it is so comfortable and simple to use, POS financing draws clients. Customers may easily spread out their payments over time. In pricey areas like healthcare or maintenance, it is quite possible for banks in the US and Europe to employ the same POS financing approach.

There are numerous examples of banks aiming to dominate the BNPL industry. For instance, we witnessed how The Commonwealth Bank of Australia (CBA) developed a new product called StepPay that has lower merchant charges and is a significant competitor on the BNPL market. Others are attempting to invest in infrastructure to create better apps or services and provide a better customer experience.

Fast innovation is more important than ever for legacy banking organizations to stay up with the quickly evolving digital market. These companies require clever, economical solutions. One strategy is implementing Bank BNPL White label products through partnerships with third parties. By implementing application programming interfaces, banks may react fast to new issues like Buy Now Pay Later. Products under the BNPL white label can change the market quickly and increase the number of customers for the BNPL banks.

Offering a retroactive plan that needs credit card ownership is not the only strategy that banking providers should employ if they want to enter the BNPL market with the greatest potential. As an alternative, they ought to provide a variety of financing solutions, and these, ought to be publicly accessible at the moment of sale.

The seamlessness of having Buy Now Pay Later available right away at the time of purchase, whether online or in-store, is eliminated by the retroactive model. Younger customers’ resistance to credit is also significantly influenced by the revolving nature and numerous hidden costs associated with credit cards. They, therefore, turn to pure plays for BNPL solutions as a result. BNPL is already available at the point of sale from some local banks in addition to card transactions.

BNPL Banks’ time to respond to this action is limited. They also have the resources, financial stability, and customer confidence to match these services. If they want to keep the loyalty of their younger clients, they cannot let this chance slip by. Even though it won’t be simple, it will be great for the banks themselves to be a part of one of the biggest and most well-liked financing solutions, and it will also make consumers safer to know that their debts are regulated and cannot harm their future finances. In the end, we can say with certainty that banks have a great future in the BNPL and consumer financing, if they understand how different market segments operate and learn how to appeal to the increasing groups, they may increase their market share in BNPL.

 

About ChargeAfter

 

ChargeAfter is a leading multi-lender platform for Buy Now pay later (BNPL) Consumer Financing. It connects businesses with the most reliable lenders, enabling them to offer customers the greatest financing solutions. With the best system of Waterfall Financing, ChargeAfter guarantees BNPL lending to every shopper, by matching the most relevant lender to every client. Using the unique consumer financing technology, ChargeAfter provides all parties, merchants, lenders, and consumers, with the best shopping experience. Phoenix, MUFG, VISA, Bradesco, BBVA, Synchrony, PICO Partners, CITI, Propel Venture Partners, Plug and Play, and other companies worldwide are among the investors of ChargeAfter.

 

Want to learn more? Reach out to us here.