As bank BNPL grows, consumers could face added risk

Local banks and credit unions are aggressively moving into the Buy Now, Pay Later (BNPL) space through providers like Equipifi. For retailers, this means your customers may soon have access to split-payment options directly through their existing bank apps rather than third-party apps like Klarna or Affirm. This trend is expected to peak during the 2024-2025 holiday seasons. For business owners, the shift toward bank-led BNPL is a double-edged sword. On the one hand, consumers often trust their own banks more than fintech startups. This could lead to higher conversion rates at the register because the financing feels 'official' and integrated with their checking account. On the other hand, banks are starting to implement risk-based pricing. Unlike the flat-fee models seen in early BNPL, your customers might see varying interest rates or terms based on their creditworthiness. Industry experts warn that as more banks offer these tools, there is a higher risk of consumers 'stacking' loans. If your customers overextend themselves across multiple bank-offered plans, it could lead to higher delinquency rates. You should prepare for a landscape where BNPL is no longer just a checkout button, but a core feature of your customer's bank account. Keep an eye on how these bank-offered plans affect your merchant fees compared to traditional credit card swipes.

Source: American Banker — Top News

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