Decoding BNPL pain points for lenders

Welcome to this action-packed edition of FinTalk. This fortnight we decode the dynamic, lucrative world of BNPL for lenders.

Giving credit cards a run for their money, BNPL has evolved to be a game-changer in the world of short-term credit. In the past year alone, the BNPL market grew by a whopping 600%. 📈

Colossal right?

The strongest uptick in BNPL was seen in ecommerce during the pandemic period. By offering 0% APR and easy repayment facilities, this POS financing option widened consumer purchasing power, repayment confidence, and spending potential. Today BNPL use cases extend to prepaid cards, crypto, and much more than you can imagine.

Pumped up opportunities 👍

According to Worldpay report, e-commerce transactions worldwide totaled $4.6 trillion last year. And BNPL accounted for 2.1% i.e., $97 billion of that sum. This figure is expected to double by 2024.

Merchants that deploy BNPL at their checkouts witnessed at least a 39% rise in online purchases this year, in addition to lower cart abandonment rates, higher Average Order Value (AOV), and conversions.

This upward trend presents compelling opportunities to lenders such as banks, NBFCs, and fintechs. As a crucial part of the BNPL value chain, lenders such as banks and NBFCs provide capital to fund BNPL purchases. And fintechs drive consumer and merchant relationships by fusing fin with tech to deliver seamless lending solutions.

Lender payoffs 💰
  • Apart from direct revenue, what other payoffs do lenders gain with BNPL?
  • Here are some tangible benefits banks and NBFCs can realize when they adopt BNPL.

Like everything in life, the BNPL gain does not happen without pain.

Pain points in BNPL deployment 📋

Building BNPL platform from scratch involves immense cost, effort, time, and all the pain points below, if done alone by yourself.

Pain point 1: Slow go-to-market speed and issues with customization.

Pain point 2: Complex merchant management and credit Infrastructure makes it difficult to assess credit limit requirements.

Pain point 3: Inability to integrate with the merchant and consumer database to aid underwriting.

Pain point 4: Security and compliance checks for merchants and lender integration.

Pain point 5: Niche skills and resources required to build integrations across merchants.

How can lenders resolve the challenges? ✔

Partner with the experts with capabilities in pre-onboarding, credit line issuance, transaction lifecycle management, post-credit line issuance activities, lender management, and merchant management. This will help you go to market in the shortest possible time with full-fledged credit offerings and seamless merchant integrations and customizations.

If you want to know more details about resolving BNPL pain points,  check out the article here.

Thats it for now. See you again soon with all the need-to-know fintech updates!

Stay tuned. Stay curious.