Credit cards, aka the competition, have also begun to get in on the action. Cardholders can now benefit from BNPL options from card providers like Amex, Citi, and Chase. Mastercard has partnered with big name banks across the world like HSBC, NatWest, and Saudi National Bank, to name a few. As with their competitors, using the service doesn’t require additional credit checks and typically has 0% APR. Where the card companies differ, however, is in the business model. Most of the first wave BNPL providers make money from service fees their partners (aka retailers) pay. For many of the major card providers, the end user takes on a fee instead. And while hard credit checks aren’t required (this presumably has already been performed if you’re a cardholder), offers may be dependent on creditworthiness. How will the BNPL originators fare? With valuations falling and consolidation likely, it could propel card companies and banks ahead. Accenture predicts that banks could increase card utilization to 26% from 21% by 2025 with embedded BNPL, tripling the number of transactions. However, the financial inclusion gap that the largely barrier-free solution addressed looks like it will still be a prime area for differentiation. Partnerships like Amazon and Affirm’s could also become another popular iteration of maturing BNPL. The future is still largely unwritten, but a clearer view is on the horizon as regulation begins to appear across the globe.
Banks could increase card utilization to 26% by 2025
21 % 2022
26 % 2025
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