Members are looking for ways to manage their spending in the face of rising inflation. Here’s how credit unions can help.
The holiday shopping season is upon us, and millions of shoppers will be gravitating toward buy now, pay later, if they haven’t used it already. This comes as no surprise as the rising cost of goods leaves consumers searching for ways to stay within—if not stretch—their budgets. According to Numerator, household essentials ranked as a top shopping category during this year’s Amazon Prime Day, indicating that many consumers planned their regular shopping activities around this major discount event. Additionally, the National Retail Foundation found that consumers opted to start this years’ holiday shopping early to spread their purchases out over several months and limit the immediate impact on their cash flow.
This trend is expected to continue beyond the holidays and into 2023. So what role can credit unions play in helping consumers to not only manage their spending, but maximize savings too?
Flexible Payment Solutions Help Consumers Maximize Savings
The ability to take one large purchase and break it into several small payments allows consumers to select a plan that fits with their budget. Many major retailers are continuing to implement BNPL into their online shopping experience, enticing buyers with the ability to split their cart total into multiple payments. The growing competition to provide credit by another name gives consumers yet another option when looking for payment flexibility.
This capability also unlocks another aspect of saving by leveraging discount shopping seasons. Consumers face time restrictions to take advantage of discounts when retailers encourage shopping activity during a specific sales event. Unfortunately, this timing may not align with the shoppers’ budgets and cash flow. Leveraging BNPL during discount shopping events like Black Friday and subsequent holiday sales allows shoppers to take advantage of the savings while reserving the cash in their checking and savings accounts, avoiding the stress of large purchases that are common during these times. This is where the power of a BNPL solution provided by a credit union becomes impactful.
The Value of BNPL From a Credit Union
Many major retailers know just how to appeal to the needs and wants of their shoppers. With the rise of e-commerce, major retailers like Amazon, Target and Walmart have doubled down in their engagement in the consumer’s journey from purchase to payment. By offering store credit cards and partnership with third-party BNPL providers, more and more players are looking to assume the role of a bank or credit union in financing member purchases, potentially becoming the go-to entity for consumers seeking greater financial flexibility.
Credit unions have access to data that allows insight into the unique needs of their members. When providing a BNPL solution, credit unions can take an individualized approach, providing members with offers that are tailored to them. Credit unions are a competitive force when offering flexible spending options to their members. What’s more, they can help members who are already spreading their larger purchase payments over multiple months to proactively make plans that take advantage of savings opportunities and align with their financial goals. This is especially important in an environment of rising interest rates. The ability to stretch a budget using BNPL installment plans allows members to stay on track without making unnecessary sacrifices. Analyzing spending patterns offer credit unions a smarter approach to helping members budget for large purchases that they know are on the horizon.
The relationship between members and their credit union is strong. Credit unions have the information they need to provide members with valuable solutions. It is time to start leveraging these factors—especially when it comes to creating avenues for flexible spending. As the holiday shopping season progresses, members want to know what payment options are readily available to enable them to have the holiday they desire without the risk of financial hardship.
Bryce Deeney is the co-founder/CEO of equipifi, Scottsdale, Arizona, a leading provider of BNPL solutions for financial institutions. Deeney is an experienced fintech and financial Institution executive with a strong record of delivering payment software solutions across a variety of verticals.