BNPL solves the riddle of merchant retail credit


Depending on where you look, the economic signs are either positive or downright worrisome.

Some companies, like Walmart, have seen continued growth in transactions across all categories, while other companies, like Target, have had to accept steep discounts in an effort to move inventory.

Add to that the latest retail data which shows sales, including at electronics companies and furniture stores, barely budged in July and the picture is starting to get cloudy.

As we head into the all-important holiday shopping season, many management teams have pointed out that this uncertainty could cause consumers to use their credit cards less often than before.

Ed O’Donnell, CEO of Versatile Credit, told Karen Webster that simply accepting credit cards is no longer enough to land a conversion, saying retailers have seen a shift in consumer behavior.

“They’re looking for more payment choices,” he said of a transition that sees consumers looking to take advantage of promotional financing, rather than using their own money or capital to make big, big purchases. .

A credit conundrum

At the same time, their desire for more choice sees a growing number of retailers facing a credit conundrum, where they want to expand their customer base and close sales, but must also do so with careful risk management. and a subscription in place.

He noted that a growing number of retailers and individuals are turning to Versatile’s platform to integrate new financing programs and solutions offered at the point of sale and on consumer devices.

The potential for using the personal handheld device or tablet as a springboard for promotional funding is enormous, he said, whether transactions take place in-store or online. Consumers can pre-populate apps with their own data securely and privately, and contactless transaction is essential to commerce.

Done right, as O’Donnell put it, a fundraising program can act as a sales tool to help move inventory that’s stuck on the proverbial shelves, can drive sales growth, and can, by extension, maintain the buzz of operations, the workers employed and the United States. economy on the way to growth.

To be successful, merchants must reach consumers of all credit levels, from privileged consumers to near-privileged consumers, to those who want access to loans that don’t require a credit check.

The opportunity is there to bring new options to end users. Credit cards, of course, have spending limits, and the debt that’s in place, or that adds to current card balances, becomes more and more expensive as interest rates rise.

The common thread is that these consumers, regardless of their credit profile, want a predictable and affordable repayment schedule, and don’t necessarily want to start paying the 24% APR that characterizes credit cards today. .

“Most people try to limit the use of these cards to make unexpected purchases,” O’Donnell said. Thus, the door is increasingly open to installment options, in particular buy now, pay later (BNPL), which are proving attractive to a number of “consumer personas” – including savvy individuals who have available credit but do not want to operate at least not yet, although merchants are still seeing success with issuing private label cards.

Targeted funding

By providing targeted financing products at specific prices on a single platform, O’Donnell said retailers can work with more than 40 different lenders to provide consumers with these sought-after financing options. He explained that Versatile sits at the center of the lending ecosystem, with information about lenders, merchants, and consumers, and can help merchants refine their credit offerings on the fly.

These lenders span different verticals, as broad as healthcare or home improvement, and tailor their financing programs to match the buying behavior that typically characterizes these segments by creating special offers and promotions that help traders close the deal.

At the same time, consumers also benefit, as they take out loans that fit their budget and help them build credit while meeting month-to-month repayment terms.

“[BNPL] is a repeatable, predictable and intuitive process,” he said, noting that the platform is also intuitive and can aggregate the app and help consumers navigate the top three or four loan deals. It is a self-service journey that also allows consumers to decide whether to accept payment terms on their mobile phone, without any back-and-forth checkout.

The data, in turn, helps merchants see which lending programs and promotions are most effective – and by extension, have seen up to 20% increase in overall sales.

Looking ahead, he said merchants were busy setting up a wide range of installment programs – anticipating an increase in demand for installment options as they begin to enter the holiday shopping season. . Versatile’s technical engineers, he said, have various deadlines that begin around the middle of next month and extend through Black Friday. More stores are open, he said, and many retailers are anticipating heavy foot traffic through the fall and beyond.

“The merchant wants to have recurring business,” O’Donnell said, “and the funding goes a long way in determining whether or not that happens.”


About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.

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