LAS VEGAS—With buy now, pay later (BNPL) services being used by consumers for increasingly small purchases, even haircuts, how soon before the CFPB zeroes in on the fast-growing, new payment/financing alternative?
Soon enough, predicts Scott Young, VP of innovation and design at PSCU, who spoke with CUToday.info about the future of BNPL at credit unions—including PSCU’s new partnership with Amount that’s helping to bring a CU BNPL solution to fruition.
In addition, Young, speaking to PSCU’s 2022 Member Forum here, also addressed how the BNPL POS experience could change in the future and possibly slow down the consumer experience at the point of sale with greater regulatory oversight of the offering.
Credit Checks
As CUToday.inf has reported, consumers often undergo very thin—if any—credit checks with BNPL offerings, as those deals move quickly at the point of sale. That is raising concerns over consumers becoming overextended with credit, and not providing a clear picture of a person’s debt-to-income ratio, which has the CFPB’s attention, said Young.
“We will need to follow the regulators to see how this (BNPL) goes,” said Young. “The CFPB is very concerned about consumer protection, and I think we are all concerned that consumers might get themselves in trouble with BNPL.”
Young shared a story about one of his PSCU teammate’s barbershop offering BNPL for haircuts and getting many takers.
“Haircuts on installment loans?” said Young.
Young said the barber was using his BNPL provider as “his bank.” “The barbershop owner actually looks at his BNPL service as his bank, that should be a wake-up call,” continued Young.
Young emphasized with BNPL use becoming widespread, for uses and among consumers, it is getting difficult for lenders, such as credit unions, to gain an accurate picture of a person’s credit position to make a good, non-risky, loan.
“There are people simply having too many of these BNPL loans at once,” he added.
But BNPL used wisely is a good thing for consumers and for credit unions, according to Young, adding that PSCU’s partnership with Amount will lead to a BNPL offering for CUs that will compete with the fintechs.
Amount is a company that offers a full suite of end-to-end omnichannel consumer, small business and buy-now, pay-later (BNPL) solutions.
Amount does make getting a credit card much faster for credit union members, which is what the partnership with PSCU will first do for CUs, stated Young.
Get The Card Faster
Getting a credit card faster is a one key hurdle that CUs must overcome to have a competitive BNPL offering. As CUToday.info has reported, credit unions’ membership requirement is another hurdle to cross to offer a non-clunky BNPL solution at the point of sale. Analysts have stated that consumers will not flock toward an offering with multiple steps.
“We are excited about our relationship with the Amount,” said Young. “It's a partnership we've been looking at for a couple years. What we're trying to do is replicate the Apple Card experience, where you can apply for a card digitally receive an instant approval—receive those card credentials in your digital wallet and use those card credentials right away.”
Young reiterated that PSCU is moving quickly toward a BNPL solution for credit unions that will compete with fintech offerings.
“The current solution is phase one,” he said.