A quick survey of the most recent edition of the PYMNTS Buy Now, Pay Later Tracker indicates that a genuine sea of change is rising when it comes to how merchants want to interact with their customers, and how consumers want to manage their transactions. And it is something that one can observe all over the world in a variety of forms — the 30 percent of Australian consumers that have already signed on for Buy Now, Pay Later accounts; or in the increasing share of millennials and Gen Z who report reticence around traditional credit offerings, but enthusiasm for experimenting with various installment payment products with trusted retail partners.
Pine Labs, which started as an offline retail payment provider in 1998, has since evolved to become a payment acceptance, stored value and in-store customer credit company that enables consumers to opt into installment payments plans online or at the point of sale in a physical store. The firm processes about $30 billion a year and works with 140,000 merchants through 450,000 global card network acceptance endpoints, mostly in India, with some penetration into the Middle East and Southeast Asia.
The investment, Zahir Khoja, Mastercard’s executive vice president of Global Merchant Solutions and Partnerships, told Karen Webster, is the latest example of its push into the world of BNPL following its purchase of POS financing provider Vyze a little under a year ago and its partnership with Divido in Europe. Khoja told Webster that there is something akin to a perfect storm accelerating the expansion of Buy Now, Pay Later worldwide and Mastercard is committed to navigating and shaping it wherever it emerges.
“There are a number of things in the market pushing [Buy Now, Pay Later], merchants that want to increase their basket sizes, lenders who are looking to new ways to reach consumers with products, consumers that want choices at checkout — the combination of all of these things have combined together and that is what is driving this market so quickly worldwide.”
The challenge, he noted, is that while the general form of Buy Now, Pay Later is consistent, specific applications and details differ. Every market has different needs, wants and regulatory bodies overseeing it all. It’s not just about building something, but the right versions for the right markets.
The Frictionless Flow
The world is increasingly full of tech hubs pouring out new ideas, Khoja noted: Bangalore, Silicon Valley, Berlin, London, Dublin, Buenos Aires and Austin, Texas to name but a few. And broadly, something very exciting is happening: Technology is now at the intersection of actionable opportunity for business of all sizes and shapes all over the world.
“That means merchants who are looking to run their business and grow their business can now leverage technology into consumer assets that will enable them to do both of those things without having to be an expert in technological integrations. It can literally now be point, click, use,” Khoja said.
Buy Now, Pay Later, he noted, offers a great illustration of this in action worldwide. Consumers want it because they want to be able to enjoy choice at checkout, merchants want to enable it because they know consumers like it — and their basket sizes increase when it is offered as an option. But how to offer it as an option, can be tricky.
That, Khoja told Webster, is what attracted MasterCard to Pine Labs, because it has spent more than a decade in the market adding merchants, brands/OEMs and financial services providers to its platform — making the experience for the consumer at the point of sale frictionless. A brand, retailer or OEM, he notes, has a product they want to extend installment financing on and that request is attached to a consumer’s card via their financial institution’s integration with Pine Labs. When the customer inserts their card into the Pine Labs terminal, and it recognizes the SKU at the POS or online checkout, the customer will be given a choice — pay in full, or have the price charged to card or mobile wallet they are using in a pre-set amount of installments.
The merchant has little to do on integration beyond plugging in a terminal; the customer doesn’t need any special account, card or wallet — it’s integrated with what they already use. It’s a model that works well in the giant Indian market and one that they can build off of, Khoja said — one that has real potential on the world stage.
“I think this partnership with Mastercard is going to enable us to work with Pine Labs to extend the types of products and value added services alongside installment payments in the market, but also to take the technology they’ve created and leverage it in other markets worldwide where it makes sense.”
That might not be every market, he noted, but finding winning solutions isn’t a search for silver bullets on a global scale.
The Changing Global Stage
Whether it is QR codes, or mobile wallet or Buy Now, Pay later — Khoja noted, there is tendency to believe there will be one-size-fits-all solutions, even when it is incredibly unlikely that that will be the case. Different markets, different merchants, different financial services providers and different consumers will always add up to different needs. Even when it is something that in broad strokes seems universally popular, he noted, it will always need refinement for relevance to the consumers it is trying to serve.
But what is amazing, as the new decade is getting off the ground, is the degree to which the technology — and the ease of use around that technology — has caught up to meeting more and more of those needs. And not just for the biggest and most technologically advanced firms on earth, but for mom and pop shops around the globe.
The challenge now, he said, is getting all that capability and value-added service to all those corners where they are crying out for it.
“We truly believe that small- and medium-sized merchants around the world today want to be included. They want to have services like large merchants, but they want to be able to do it leveraging their mobile phones or other low-cost acceptance devices and easy-to-use software. That is where we are focusing our efforts — trying to find partners around the world that will allow us to help with that.”