Mastercard unveils new ‘buy now, pay later’ program for consumers and merchants


Mastercard announced on September 28 that it is entering the deferred payments industry with its flagship “Buy Now, Pay Later” program.

Buy Now, Pay Later (BNPL) has become a trend in recent years with fintech companies like Klarna and Affirm allowing consumers to divide their purchases into interest-free installments.

BNPL programs vary in their execution, but most offer a similar model. Companies partner with BNPL companies, which then facilitate a payment plan at the end of a transaction.

For example, if a consumer makes a large purchase at an electronics store, they may be offered an option at checkout to split their purchase into four interest-free installments. The customer will not be charged any additional costs if he reimburses the down payments on time and in full.

The future of credit cards meets deferred payment programs

According to Mastercard, its BNPL program will provide consumers with a “seamless experience” that will offer “more payment options wherever they shop”. The new program will not require consumers to take additional steps at the end of their transaction and is backed by Mastercard’s zero liability protection.

“The line between credit cards and buy now, pay later is becoming increasingly blurred,” said Ted Rossman, senior industry analyst at Bankrate. “Many consumers are drawn to instant gratification, easy access and predictable payouts. “

Mastercard believes its new BNPL program will benefit not only consumers but also merchants and lenders. Mastercard offers merchants and small businesses a way to quickly enter the buy now, pay later ecosystem without the burden of upfront costs or the responsibility of going it alone in a relatively new payments environment.

For consumers, the benefit of BNPL comes in the form of convenience. For merchants, Mastercard promises security and scalability.

“The mix of physical and digital is a huge trend in retail,” says Rossman. “Buy Now, Pay Later Companies have done a great job selling their solutions to merchants. Even though they typically charge a higher processing fee than credit card issuers, buy now, pay later, companies have made merchants buy into the narrative that they sell more things when they offer buy now, pay their customers later.

The bottom line

If current trends are any indication, buy now, pay later, the systems are here to stay. Affirm has announced plans for a debit card, as traditional financial institutions such as American Express, Chase, Citi, Goldman Sachs, Visa, Capital One, Bank of America and Wells Fargo are in various stages of implementation. work or are considering pushes to buy now, pay later, ”says Rossman. “We’re getting closer to a time when buy now, pay later could be seen as a category in its own right and more as a regular, everyday payment method. “

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