Mastercard extends BNPL offering to lenders

The new program, Mastercard Installments, will allow lenders and fintechs to offer their customers an additional buy now, pay later (BNPL) payment option across the Mastercard network in-store and online.

Mastercard has marketed the solution as a way for lenders to offer a seamless buy now, pay later (BNPL) experience without needing to integrate with merchant infrastructure and to expand their lending into a fast-growing consumer segment.

Customers will either need pre-approval through their lender’s mobile banking app to use Mastercard Installments or they will be able to access instant approvals at the checkout, through Mastercard’s digital wallet app Click to Pay.

Similar to other products in the segment, MasterCard Installments has a zero per cent interest model, with payments split into four instalments.

BNPL players will also be able to integrate Mastercard Installments’ application programming interface (API) into their own offerings, extending their reach beyond their existing footprint.

Ultimately, they’ll be able to skip making direct arrangements with merchants that already are plugged into the Mastercard network.

Australia is one of three launch markets for the product, alongside the UK and the US, with Qantas Loyalty and Latitude being its initial partners.

Latitude previously teamed with Mastercard to roll out its own BNPL product, LatitudePay – which was accepted across the payment giant’s network.

Speaking on Mastercard Installments, Richard Wormald, division president, Australasia at Mastercard commented: “Australians have always valued greater choice, security and convenience in the way they pay, so it’s no surprise that the country has been at the forefront of BNPL innovation.

“Mastercard Installments builds on these strong foundations, enabling local banks, lenders, fintechs and merchants to customise their own buy now, pay later model – providing new ways that work online and in-store, backed by the security and peace of mind that comes with a Mastercard transaction.”

Ahmed Fahour, managing director and chief executive of Latitude Financial added: “Through our long-standing relationship, Latitude is looking forward to working with Mastercard to bring new BNPL payment solutions to life in Australia, benefitting merchants and providing customers with a superior shopping experience.”

More lenders turning to BNPL

More and more lenders have entered the BNPL scene as US payments company Square has bought Afterpay for around $39 billion.

Suncorp recently declared that it would be launching a Visa-backed BNPL offering called PayLater in November.

CBA also launched StepPay earlier this year, while Westpac’s New Zealand arm entered into a joint venture agreement with BNPL provider humm group in July, rolling out a product called bundll to the Kiwi market.

Citi on the other hand will release its own rendition to the Australian landscape, called Spot., in October.

A NAB report in June showed BNPL became the fourth-most common debt held by Australians over the March quarter, retained by around 18 per cent of consumers.

However, an ASIC report in November last year found 22 per cent of BNPL customers prioritised their buy now, pay later debt over loan repayments or bills.

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