You now have one more reason to get a Mastercard with the new BNPL (Buy Now Pay Later) option. With the launch of this high-demand option, Mastercard expects to boost its reach in the US, UK, and Australia.
It doesn’t matter if you have a debit, credit, or prepaid card, you can use still use the BNPL option. Mastercard’s BNPL is an interest-free option as well. This will help you to make those purchases that were out of your reach in the past, especially when the Corona pandemic is still not showing any sign of fading away. The opportunity to pay later can become a lifeline for many during this time, especially those who have lost their job or had to face salary cuts.
Overall, the BNPL option by Mastercard makes purchasing flexible. It makes buying easier, and the seller will have the flexibility to give you this option without any difficulty. Mastercard’s secured system will also protect the seller from any fraud and ensure that the merchant gets their payment.
Mastercard Installments will make the entire transaction secure and worry-free. This enhanced system will consist of four different levels. The levels are as followed:
MasterCard Buy Now Pay Later Partners
Partners, also known as the facilitators (like digital wallets), will get the option to integrate the Mastercard BNPL plan for their users. They will get the ‘Mastercard API’ to interact with the Mastercard data, meaning that they can extend this facility to the merchants that were already associated with them and MasterCard. Furthermore, they can use this opportunity to add more merchants or sellers to their portfolios. The best part of this integration is that there will be no direct settlement arrangements at the merchant’s end, thus saving time and giving the customer a smooth buying experience.
The entire system is seamless and easy to handle for merchants and customers.
Lenders
When your bank offers you a loan, it does that based on various important indicators. These indicators can be your credible transactions, money debited or credited from your account, and/or any other indicator that proves your payback capabilities. The bank is the lender in such a case. Similarly, companies like fintech can check your credit score and lend you money in the form of BNPL.
Lenders can now easily pass on the BNPL facility by Mastercard to their consumers.
The lending sector is one of the fastest-growing sectors in the US. With the new option of BNPL by Mastercard, this sector will only get bigger. Companies like Apple are also planning to launch their own BNPL facilities in the market, but they will not have any significant impact on the market as compared to Mastercard BNPL. For instance, many consumers planning to buy an Apple phone will still have the option to buy it through the Mastercard interest-free installment facility under the BNPL. The same does not apply the other way around for Apple BNPL. Mastercard is in a win-win position as of now.
Merchant
The primary beneficiaries are the merchants. After the economic stagnation due to COVID19, every merchant started exploring new possibilities to increase their sales. With the BNPL facility by Mastercard, they will get a new powerful tool to enhance their business. The system is scaled and works securely in the background. Therefore, there is nothing that the merchant has to worry about.
Consumer
The buyer, or consumer, is the end-user that all companies compete with each other for. The pandemic has led many consumers to spend more wisely. People have stopped themselves from upgrading consumer products and services. Now, with the option of BNPL facility by Mastercard, they won’t hesitate anymore. Consumers become more willing to upgrade when the cost upfront is cut down.
For a consumer, the most significant benefit is the ‘zero liability fraud protection.’ This protection is unique to Mastercard. Not many BNPL companies give this level of security and peace of mind to the consumer.
Impact on the Market
This lucrative offer has motivated many to start buying more. Companies like PayPal, Klarna, and Visa already had this facility for their users. But, with Mastercard in the competition, the dynamics have changed.
Barclays US, Fifth Third, FIS, Galileo, Huntington, Marqeta, SoFi, and Synchrony in the US will be the BNPL associates. Through them, MasterCard will deliver this facility to around 73 million cardholders. In Australia, Qantas, Loyalty, and Latitude will push this BNPL program to the merchants and users.
The end-user can avail of this facility without any paperwork or online formalities. It will be a secure and straightforward interface- both for the merchant and the buyer.
Impact on the People
Buyers across the world have been using credit and debit cards for a few decades now. The ease of transaction along with the fast, secured payment methods have expanded the market like never before. The buy now and pay later option created a new extension to the ever-growing market. BNPL facility contributed so much in online transactions, especially with buyers that lived paycheck to paycheck.
A report published by PYMNTS said that 14% of buyers online have used the buy now pay later facility. This number will further grow with Mastardcard’s entry into this segment. Around 57% of the total users of this facility are people who earn less than $50,000 a year. Of all the people who used this facility, the average age was 47, and most of these people lived under financial constraints. Now they have access to things that they could have never purchased before.
How will The End-User use BNPL?
BNPL facility will be delivered to the end-user by the merchant. The end-user can set the option in their wallet to buy a product online, or they can get the facility activated on the spot without any hassles.
Mastercard Installments will extend the facility to lenders like banks, fintech, or wallets. Some essential facilities that can quickly popularize are ‘zero interest’ and ‘pay in installments’ options. These lenders will facilitate the merchants to check the credibility of the end-user and extend the facility.
With Mastercard’s BNPL, users will be motivated to buy more. They will get the option to pay in four or more installments, and since the amount is interest-free, there won’t be any extra financial burden for them!
