Consumer financing goes beyond traditional credit cards or other consumer lending products. Buy Now, Pay Later (BNPL) is a rapidly growing ecommerce payment option. BNPL is growing in popularity among US consumers for the following reasons: 1) low or interest free financing, 2) avoidance of incurring credit card debt (some BNPL customers do not have a credit card), and 3) ease of experience at checkout. Consumers are more willing to try new products that provide a better experience - driven by convenience, value, and choice. Merchants are eager to offer BNPL to consumers. Some of the top benefits include Average Order Value (AOV) lift, sales lift, and cart abandonment reduction. First-time BNPL customers are also more likely to make more BNPL purchases over time. It also allows merchants to avoid the interchange fees incurred with more traditional credit products. However, implementing a BNPL offering is not trivial. Critical requirements of a BNPL experience are a frictionless checkout process and flawless execution in the transaction process. Merchants have many considerations when it comes to implementing BNPL, as not one size fits all. Whether the merchant decides to partner with a direct- to-consumer (consumer branded) platform, or a white-labeled platform, the back-end technology considerations are similar. While consumers may expect that a given BNPL process should be more lightweight than applying for a credit card, many of the same back-end processes that occur for other forms of credit also need to happen with BNPL. Credit issuers that offer BNPL products must have the ability to tailor decisioning and adjust to constantly changing product offerings.
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