Just two years ago, it was rare for a US based eCommerce website to offer buy now, pay later (BNPL) as a payment option upon check out. Shoppers had the typical options of using their existing cards, PayPal, or other alternatives to make a purchase.
Since then, BNPL has become a staple option at nearly every website (and soon every in-store purchase) during check out. Millions of shoppers have gravitated towards these solutions due to the simplicity of the fee structure and ability to stretch their budgets without the need of a credit card.
Consumers are being offered this today from fintechs, but not from their primary financial institution.
Over 90% of shoppers who utilize BNPL are debit card top-of-wallet users.
Once a shopper has selected BNPL as their payment method, they set up their installment plans with their existing debit card or bank account via ACH. With autopay, it's set it and forget it. The purchase and the loan taken out for it become out of sight and out of mind for the consumer. You, as their chosen institution, become disconnected from your members' financing experience.
This phenomenon is challenging for financial institutions, which lost $100B in consumer spending in 2020 alone. With each additional purchase made through fintech BNPL, your members become further removed from their relationship with your institution. As third-party BNPL solutions continue to take hold, the threat of attrition and disengagement that banks and credit unions face grows.
When you lose connection with your members during their shopping experience, you risk losing the members themselves.
But is fintech BNPL the best solution for your member?
They log into your banks online app to view balance, utilize Bill Pay, P2P, and other money movement strategies. Meanwhile, they must log onto your competitors app to check their BNPL balance, payment history, and future payments. What's more, they are constantly asked to adopt their debit card and other products.
Companies like PayPal and AfterPay (recently acquired by Square) have revolutionized frictionless payments, but they are still actively trying to gain the most valuable piece of the puzzle - direct deposit. BNPL was their tool to become part of consumers' shopping journey, and they have been wildly successful, Now, all BNPL companies are launching deposit accounts and debit cards to try to win the entire relationship.
It's not too late to grow and engage your membership. It means you must provide them with your own BNPL solution, and taking them shopping.
Shopping and banking are blending into a single, seamless experience.
For consumers, the division between buying and paying is disappearing from the shopping experience. Members today are using digital wallets, digital cards, digital banking, and online shopping platforms. Anything less than a simple and frictionless experience leaves members wanting more, and risks losing their loyalty completely.
That's why now more than ever, it’s important to get in the game. Consumers need a seamless payment experience in addition to their buying experience. All payments, loans, and money movement strategies must be fully integrated.
Why not do so with your online banking? Let's get started today.