Buy Now Pay Later enjoyed exceptional growth in the past two years, but it will likely surge as Visa perfects its new offering. With Canada as a launch point for Visa Installments, Visa just announced a third financial institution that will offer the program. Joining Scotiabank and CIBC is Desjardins.
Desjardins is a fascinating financial institution with CAD 362 billion in assets. The firm is the home of the North American credit union movement, following the path of a fabric weaver’s financial cooperative in Manchester, England. The inspiration for Alphonse Desjardins’ innovation was in 1897 when he observed a consumer loan turned into a financial nightmare. The consumer had a past due $150 loan and incurred $5,000 in interest charges. Today, there are 231 Canadian credit unions with six members and 5,298 in the United States with 124 million members.
Visa Installments is a breakthrough for BNPL. Visa solves one of the most significant issues in BNPL- unqualified lending. At selected merchants, with Visa cards issued by CIBC, Desjardins, and Scotiabank, the consumer may opt to have the transaction booked as an installment loan. As a result, customers work within their existing bank-grade credit limit.
Participating in this technology is Global Payments. According to Visa’s press release:
- Global Payments is enabling its merchant customers to offer Visa Installment options to their consumers. With a single integration, merchants will have the ability to facilitate installment offers for eligible cardholders without having to sign up for a new service. In turn, eligible credit cardholders can choose whether to pay in smaller, regular amounts at the point of purchase with their existing credit card. In addition, issuers enabled for Visa Installments will be able to offer their credit cardholders installment options at participating Global Payments merchants.
- In collaboration with Visa and Global Payments, Desjardins will be among the first to enable Visa Installments and offer its eligible cardholders the ability to pay in equal payments over a defined period of time at participating merchants.
Merchants who are often sold BNPL services hear “no interchange” when the sales pitch begins. Many find that the lack of clarity comes with unexpected charges. You can be sure that clarity will be the order of the day, as prescribed by Canada’s Code of Conduct for the Credit and Debit industry.
Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
