#Buy Now-Pay-Later Partnership Model: – Which is right for your financial institutions?

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Buy Now-Pay-Later Partnership Model: – Which is right for your financial institutions?

For the last few years buy now pay later financing is in trend, it is the fastest-growing online payment method globally.

If you’re thinking of entering the BNPL marketplace but aren’t certain what the right road is, there are numerous BNPL partnership strategies between financial institutions, merchants, and tech providers. While the main aim of these partnerships is the same, make their customer’s payment options easy—the growth of these partnerships depends on organizations. Here are some models which will assist you in choosing the right one.

1.Marketplace: –

The marketplace lets traders hook up with a community of creditors through the BNPL. Compared to other BNPL models, the marketplace partnership connects consumers with multiple, competing financial institutions so that consumers can go for the best purchase. This method ends in better popularity charges and decreases the cost for customers for the reason they’ll relate to their exceptional healthy lender.

Merits/demerits: –

Financial institutions can gain a lot from this model, as the BNPL company does the maximum of the heavy lifting. However, because the marketplace model connects multiple monetary establishments with a single merchant, your financial institution ought to know that you’ll compete with each other. Also, the BNPL is not going to involve your branding on behalf of that they’ll use their own branding.

If your financial institution is inclined to exchange popularity and be prioritized for a short integration, then this is a feasible option.

2.Rent-a-platform partnership: –

The rent-a-platform partnership model requires a BNPL tech provider to provide financial institutions with a platform that financial institutions can trade. This gives your financial institution the ability to choose which trader will use your program. White-labeling capabilities and the possession of the platform will give you more presence and voice. Examples of buy-now-pay-later include Jifit and Amount, which give services to financial institutions like Barclays TD Bank and BBVA.

Merits/demerits: –

They allow institutions to provide a product they can control. This can be possible only with content and engagement with the trader. This takes time to launch which gives unequaled personalization. With the focus on the financial institution over the BNPL provider, this version can assist you in great customer engagement.

If your financial institution values offering a differentiated product to your chosen traders and customers, then this is for you.

3.Card-Platform: –

The card platform partnership, card networks give the facility of point-of-sale transactions among the issuing financial institution and the client on their present card. This means that cardholders are still able to take the benefit of credit card points. With this, the issuer of the card is not tied to any trader and cardholders no longer want to apply for a brand-new loan. This platform partnership is a good alternative for institutions that already have networks. Consumers can get admission to the BNPL funding option after they have made the purchase from the card. Known as “post-purchase BNPL,” with this option, the customer will log in to the card account and will select the buy now pay later funding option.

Merit/demerit: –

This model is best for those institutions who have a current credit card and want to interact with present clients. By integrating BNPL into a credit card, financial institutions will be able to reinforce their relationship with present customers.

Unlike the other models mentioned above, this platform will issue after the customer has made the purchase. This brings the blockage to financial institutions to engage with clients. Bringing new customers will be difficult for this model. Customers need to sign up first for the credit card to use this model.

If your financial institution is offering a current credit card this option is right for you However, post-purchase BNPL has not seen the same growth from the past few years as other BNPL models.

How to find the right fit for your financial institution?

The BNPL explosion we’ve seen during the past year has been tremendously driven by customers who want an immediate, hurdle-free shopping experience. Opting for the right buy-now-pay-later for the business brings down the priority of your customers.

While the marketplace model offers clean integration, financial institutions must compete against each other. This model connects multiple lenders to one trader so that every consumer will get their best match. Unfortunately, the consumer’s best match might not be your financial institution. Additionally, this model treats the financial institution as a background player and avoids driving attention back to it.

The rent-a-platform model offers the opposite of it. With it, financial institutions will get a platform, new and existing consumer retention, and direct interaction with their chosen merchants. This platform takes time to launch and the engagement is unmatched.

If you are looking for faster integration, then the card platform is the best for you. By integrating with an existing credit card, financial institutions can reinforce their relationships with current customers. However, this model makes it difficult in catching new customers, as the post-purchase BNPL option surfaces after the customer makes a purchase.

With the rapid use of BNPL financing merchants, lenders, and consumers alike are on the lookout for their best buy-now-pay-later. There are so many options that can assist you in this.

Conclusion: –

By going through this article, you must have gotten the idea of some models which will be suitable for your financial institution. And which financial institution you should opt for yourself. And which will give you the benefit. Buy-now-pay-later is rapidly increasing and benefitting financial institutions. You can go through these platforms and choose the right one.

Author Bio

Aline Huseby is a Sales & Marketing Manager at ChargeAfter. She would like to share content on Finance Industry like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable reader.

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