Buy Now-Pay Later (BNPL) continues to be white-hot for consumers looking to buy products on installment payment terms. Card networks are noticing and are looking to get in on the action by teaming up with BNPL providers. The most recent example is Discover providing access to its vast payment and merchant network to Sezzle, a growing BNPL lender. Consumers are still itching to buy higher ticket items which are reflected in the recent U.S. Commerce Department’s retail sales data (and reported here in PaymentsJournal).
The Commerce report shows home furnishings and electronics as sales leaders during the January 2021 spending period. Some global regulators in the U.K. and Australia are flashing warning signals to BNPL lenders as the spending bubble gets larger.
The U.S. market saw record expansion of the BNPL market in 2020 and a very crowded field of competitors. BNPL’s growth path will continue during these times of U.S. economic stimulus programs at least into the first half of 2021. There could also be pent-up demand and more consumer spending once Covid-19 vaccination distribution reaches high levels in the next few months.
The following excerpt from a Yahoo Finance article reports more on the topic:
Discover, a digital banking and payments services company, and Sezzle, Inc., an installment payment platform, have announced an agreement that will allow Sezzle to work with selected merchants on the Discover Global Network in offering consumers additional payment options.
This relationship is Discover Global Network’s latest partnership in the buy now, pay later space and Sezzle’s latest partnership with one of the four major card networks in the US market. Select US merchants will be able to offer their customers an interest-free buy now, pay later option through Sezzle’s platform, with little to no upgrades to their existing payments systems. These merchants will have the option to process buy now, pay later transactions on the Discover Global Network.
“Our partnership with Discover will help to further accelerate our business development efforts by connecting our team with Discover and its established relationships,” said Paul Paradis, an Executive Director and the President of Sezzle.
“Our merchant partners are always a top priority and we know that providing them with additional payment options, such as a buy now, pay later structure, can be beneficial, especially in the current economic environment,” said Jason Hanson, senior vice president of global business development and acceptance at Discover.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group