PURCHASE, N.Y.–After primarily being the domain of start-ups and fintechs, a major player is planning to enter the buy now, pay later financing space: Mastercard.
The company has announced plans for a new BNPL offering it said in a statement would enable banks, fintechs, digital wallets and other lenders to provide a variety of installment payment options to their customers/members, whether they are making purchases online or in a store.
“Merchants are able to accept this with zero effort on their part, either for online transactions or in-store,” Craig Vosburg, Mastercard’s chief product officer, told the New York Times.
Mastercard reported it is already working with several financial institutions, including Barclays, Fifth Third, Huntington, SoFi and Synchrony, to offer BNPL products of their own. The program will become available in the first quarter of next year in the United States, as well as in Australia and Britain, the Times reported.
‘Ubiquity’ May be Achieved
According to Mastercard, even existing BNPL players could plug into Mastercard’s program, if they chose to, which could broaden their reach.
“Mastercard brings its existing global acceptance network to the table, potentially giving buy-now, pay-later solutions the ubiquity they have been seeking,” Ginger Schmeltzer, a senior analyst for the research and advisory firm Aite-Novarica, told the Times.
According to Mastercard, consumers using its BNPL options will be provided with preapproved offers through their lender’s mobile banking app, or they may be granted instant approval at checkout.
“Mastercard will be able to help lenders with the underwriting process: If consumers give consent to the pay-later lender, Mastercard can provide a window into their checking and other transactional accounts — and that information can be considered as part of the approval process,” the Times reported.
Surging Growth, But…
As CUToday.info has reported, growth in BNPL solutions has surged, especially during the pandemic when an increasing number of consumers have shopped online. But when shopping in person, BNPL solutions are available to consumers in various apps and at the point of sale.
Yet despite that growth, and concerns by card issuers they will lose volume and interchange income, data show BNPL options still account for only 1.7% of online sales in the United States, a segment dominated by credit cards, which accounted for 30.4% last year, according to Worldpay, the Times reported.