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The Top Benefit of Having a Buy Now, Pay Later Card Program

woman on couch with arms up in celebration and laptop and credit card
Melissa Jankowski Photo
SVP/Head of Debit, Credit, ATM and Software
FIS

2 minutes

Payment flexibility leads to increased accountholder loyalty.

Sponsored by FIS Global

The buy now, pay later market is expected to grow 181% by 2024 according to the 2021 Global Payments Report by Worldpay from FIS. In fact, according to the same report, BNPL services—which allow consumers to buy now and pay in installments over time—rose nearly 78% in 2020, the biggest leap of all payment types, and is projected to account for 4% of global e-commerce spend by 2024.

The concept of post-purchase installment programs isn’t new, but the ease of use, flexibility and mutual benefit they deliver at various phases of the value chain have made them one of the fastest-growing segments in payments. 

Financial institutions of all sizes need to offer these solutions to compete with alternative point-of-sale installment loan providers like Affirm, Klarna and Afterpay, and issuers like Chase, Citi and American Express—all of which offer some iteration of a flexible repayment plan.

What Is the Real Benefit of These Type Of Solutions? 

The need to make a large purchase can occur at any time and it is often in these unpredictable moments that members find themselves in an intense financial burden. Cars can break down, roofs can leak, and unexpected medical expenses can cause individual members and families to go through a time of uncertainty and experience financial anxiety. Post-purchase installment solutions give cardholders the flexibility to make larger purchases and can increase card use and preference by offering cardholders more choice and control. Issuers can use post-purchase installment loans to add additional functionality to their member cardholder portfolio, differentiate their offering, drive revenue and expand debit cardholder relationships. 

There is already a public demand for these types of solutions as well. In fact, according to the 2020 FIS Generation Pay survey, 50% of members would use BNPL for a purchase under $250 and 41% said the same for a purchase between $250 and $999.

How Does This Solution Actually Work? 

After cardholders make a qualifying purchase, they receive an alert giving them the option to turn their large purchase into smaller payments that can be paid over a set period. This allows cardholders to free up their cash flow and lessens the burden that would have been present if the purchase had to be made in a single lump sum. 

This financial flexibility gives cardholders peace of mind while providing enhanced card loyalty for the financial institution. Members will be more likely to keep the card that provides this flexibility top-of-wallet, especially when it comes to their larger, unavoidable purchases. 

Financial institutions that provide options for their cardholders to pick what is best for them can set their organization apart as one that provides a unique experience that puts the member first. Providing this individualized experience will enhance the relationship you have with your cardholders.

Melissa Jankowski is SVP/head of debit, credit, ATM and software at CUES Supplier member FIS, Jacksonville, Florida.

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