Not so long ago, “buy now, pay later” (BNPL) transactions were popular only among metropolitan areas and today’s youth. Now, however, this type of installment credit has become a great alternative to credit cards, used by consumers of all ages and social statuses worldwide.

Financial companies that provide credit cards to their customers do not view BNPLs as a threat or a competitor to credit card programs. On the contrary, they launch such programs to expand their own product range and to retain customers.

How the BNPL program works

BNPL is a micro-loan program that is decided directly at the point of sale. The retailer offers the customer the opportunity to use the program at the time of purchase. If the customer acknowledges, the BNPL provider gets information about him and assesses his creditworthiness. When the buyer passes the check and accepts the terms on which the microloan is issued, payment is made by virtual card or direct integration with the payment system.

The advantage of BNPL for the buyer is a lower interest rate and more time to pay. In addition, the buyer does not need to go to another banking institution to apply for a loan. He gets the service in the complex while shopping. Payments can be made in installments over several months, and a certain grace period can be given without interest and additional fees.

The advantage of the BNPL program for merchants is a higher conversion rate and order volume increase. Customers who regularly use this microcredit claim that if they were not given this opportunity, they would be unlikely to make this purchase. This means that without BNPL, retailers would be missing out on a significant portion of their profits. For financial institutions that provide BNPL lending, the program is also a source of additional revenue and a way to increase customer satisfaction.

How do you implement a BNPL program?

Most traditional banks denied their clients the BNPL program because their infrastructure was unprepared for such projects. At the same time, clients also found it difficult to economically justify the need to issue cards with small credit limits to a large number of cardholders for a short period.

BNPL projects can implement virtual cards issued through the Wallester platform. They are issued for multiple uses and for one-time purchases. These cards can be used to pay at POS terminals, make online purchases and withdraw cash from ATMs. Virtual cards are much faster and easier to issue than physical cards and have the same functions. They are given a card number, an expiration date, and a three-digit security code (CVV).

The virtual card for the BNPL project can be received digitally immediately after ordering. It means that making a purchase within the limit allocated on the card does not have to be put off for later. Using virtual cards is absolutely safe because all transactions are securely protected by double authentication technology 3D Secure, which provides confidentiality of online payments.

Managing a card project is simple through the Wallester platform. It has all the tools you need to issue cards, manage financial flows, and control costs. With a state-of-the-art platform, the payment process is simplified. Financial institutions have the opportunity to provide customers with different payment acceptance options to fit their personal budgets and spending habits.