Buy now, pay later: important purchases at your fingertips
The Buy Now, Pay Later (BNPL) wave first formed around relatively inexpensive fashion and beauty products, but industry watchers continue to look for new use cases that will grow and develop. will unlock greater potential, in many cases for consumers with compromised credit.
Among the areas where consumers would like to have access to installment payment options, medical and dental expenses as well as home renovations are prominent, although there are not many BNPL options in these spaces yet. This is a gap that Wisetack is filling with simplified consumer financing for goods and services where BNPL coverage is now virtually absent, from durable goods to cars to dental care.
As Wisetack CEO and Co-Founder Bobby Tzekin recently told Karen Webster: âWe are at the intersection of two major trends,â one being âthe awareness by consumers that there is today. ‘hui better options for borrowing’, the other being ‘the adoption of buy now, pay later in e-commerce in the past five, six, seven years [showing] how great the need of consumers is.
Like all other credit providers, Wisetack competes with $ 4 trillion in annual credit card spending – still very popular among those with unsecured credit. However, $ 1 trillion in card debt is renewed every year, he said. âPeople understand that it’s a very expensive way to borrow. When there is a better option for paying for a purchase, people will go for it.
Tzekin acknowledged that the company currently specializes in a handful of verticals, oriented towards home trades, where prices are often high.
“We’re focused on emergency repairs and things that are still in that range of a few thousand to $ 10,000 to $ 20,000, which people generally want to deal with faster than getting a line of credit. on home equity, âhe said. .
BNPL’s big bills are good news for consumers with little or no credit, or for those who just want to manage their spending.
According to The Second-Chance Consumer: How Buy Now, Pay Later Payments Create New Merchant Opportunities, a PYMNTS and Sezzle collaboration, âA large portion of the Second Chance survey respondents who chose to use BNPL as an online payment option said it helped them spread their payments over time (55%) and helped them manage their monthly expenses (43%).
Get the study: The second chance consumer: how to buy now, pay later to create new opportunities for traders
BNPL Online / Offline Opportunity
The consumer experience is the elusive measure by which businesses are now measured, and payments are one of the best ways to deliver a positive experience, while realizing a profit.
This is another differentiator for Wisetack: it works online or offline, depending on the customer.
âThe adoption of buy now, pay later has been significantly slower or non-existent offline for purchases that aren’t made on a website by checking out with a shopping cart,â Tzekin said.
Describing the many manual steps BNPL offline involves – home visits for quotes, dealing with representatives – he said: âWe have created something that works very easily and transparently for businesses and consumers for these purchases. offline. It’s a complicated process that we make really simple and easy.
He added, âWhether the consumer is interacting with a technician in the field or an administrator over the phone, these company employees can usually push a button and send a text message to the consumer with information about their financing options with. Wisetack. “
As an online solution that relies heavily on application programming interfaces (APIs), Wisetack is integrated into platforms “in the same way that card processing is integrated into a software platform”, Tzekin told Webster.
âIt allows a software platform to deliver a much better product to its customers, which are businesses. Part of our differentiation is that we’ve made buy-now and pay-on financing work seamless and easy for businesses, the same way we’ve become used to card processing. .
Businesses pay merchant processing fees comparable to card processing for using Wisetack, but Tzekin said they don’t charge origination fees, prepayment fees, or late fees.
See also: FinTech Wisetack Raises $ 45 Million to Expand BNPL In-Person Services Solution to More Vertical Markets
Risk and reward
All BNPL providers adjust credit underwriting models as the financing concept develops.
âWe verify the identity of the person on the other side: ‘Are they who they claim to be?’ Then we check their ability and willingness to pay based on things like their credit report. We use thousands of data points, âTzekin said. âI am very excited about the speed and fluidity of this process for the client. They don’t have to spend a lot of time providing information. It’s quick and easy, and we’re able to make large loans very quickly, which is convenient for our clients.
Wisetack has integrated with a variety of platforms, which he says is âa scalable way for us to reach a lot of people. However, people can use us with or without integration.
A PayPal and LendingClub veteran, Tzekin said he first encountered (and helped resolve) many of the underwriting scenarios that Wisetack is dealing with today. This experience in consumer credit and B2B is invaluable for this atypical BNPL service.
âWhat’s going on in loans, in a way we’ve seen this movie before in card payments,â he said. âThat’s why we’re uniquely positioned to create technology that takes what we’ve seen in both lending and card processing and to create technology that sits at the intersection of the two. We do loans, but it’s for the purchase. It’s a payment method, and it sheds a lot of light on everything we’ve built.
See also: Physical traders get help surfing the BNPL wave