Intense “buy now, pay later” competition between payment card brands and independent providers is expanding conversion opportunities for merchants. By layering additional services on top of existing rails, Visa, Mastercard, Discover, and American Express have become global technology platforms. Similarly, independent BNPL providers first offered consumer financing and then expanded into apps, embedded commerce, and payment card issuance.
In recent interviews, industry analysts and providers share their perspectives on how “buy now, pay later” has evolved into broader functionality and improved the experience for consumers and merchants. Did.
embedded commerce
iconic credit card brands Share a crowded stage There are cryptocurrencies, digital wallets, and alternative payment schemes, each with its own value proposition and target audience. According to Miles Tullo, managing director of banking and payments at J.D. Power and author of “2024,” half of U.S. consumers use credit cards such as PayPal, Apple Pay, Venmo, and Cash App. using an alternative.Digital wallet satisfaction survey”
Tullo expects digital wallet platforms such as Apple Pay Later to continue to expand through diverse product and service offerings, despite varying merchant acceptance.
“Apple Pay Later users tend to be younger, wealthier, and financially healthier than other Buy Now Pay Later users,” he said. Apple Pay Later is built into Apple Wallet and allows users to view multiple transactions in a single access.
Pat Suh, Senior Vice President of Revenue I affirm, BNPL providers cite embedded commerce as a key growth driver. “Growing with our franchisees is a top priority for Affirm,” she said. “Most of our volume comes from merchant and partner integrations. From rolling out new features and products to optimizing integrations, we are constantly looking for and implementing opportunities to deliver even more value for our customers. doing.”
Suh said Affirm integrates with payment platforms like Shopify, Stripe and Amazon Pay, allowing merchants to add Affirm as a checkout option with just a few clicks. She explained that this allows Affirm to reach retailers and consumers at scale.
Issuance of payment cards
Most of its volume and users from a merchant Affirm is a hybrid that combines the ease of use of a physical card with the flexibility and transparency of a virtual card, Suh explains.
“Our DTC business grew 51% year-over-year to $2 billion in the second quarter of fiscal 2024,” she said. “As we continued to gain share and expand our reach, our total volume increased by 32%, which is four times the growth rate for overall e-commerce during this period.”
Suh said the Affirm Card can be accepted online, in-store or anywhere Visa is accepted. Users can request a payment plan in the app before checking out, link a bank account to pay with her Affirm card, or use the app after a swipe or tap to select a payment plan for eligible purchases. You can request it.
“Affirm Card users transact far more frequently than our other users,” she said. “This card allows us to increase our penetration into categories that we have not previously addressed, such as everyday shopping and restaurants.”
More competition, more choices
Bryce Deeney CEO EquipifiAffirm Card, a BNPL provider for banks and credit unions, has signaled that it poses significant challenges to incumbent financial institutions.
“By offering an alternative to a bank or credit union card, companies like Klarna and Affirm are capturing customers at the point where they need to make a single buy now, pay later purchase,” he said. ” “And once the consumer is approved and downloads the app, these companies try to win the entire relationship. This is a huge threat to traditional publishers.”
Deeney noted that sellers may be doing the following: similar concerns. If a consumer can get her BNPL in one click, what’s stopping her from shopping on a digital banking app instead of the seller’s website?
Nevertheless, despite the competition, BNPL providers, financial institutions and merchants ultimately want the same thing, to ensure that customers have a positive experience with their brands and payment products. He said it was the right thing to do.
“As long as consumers have easy access to credit and cash flow, and merchants keep their customers top of mind, it’s a world where everyone wins: consumers, issuing banks, and merchants,” he said. Ta.
