The Acceleration of BNPL and Cryptocurrency

While BNPL solutions have hit the mark, it is too early to predict what impacts — positive or negative — cryptocurrency might have on credit unions and the broader payments industry, Tom Gandre, executive VP and chief operating officer at PSCU, writes in the PYMNTS eBook, “Endemic Economics: 32 Payments Execs on the ‘Next Normal’ That Never Happened.”

The credit union and payments industries have experienced rapid changes over the past two years, with this acceleration of digital only expected to continue as we look toward the future. Some of this acceleration has resulted in the rapid adoption of tools and solutions like buy now, pay later (BNPL) or installment payments. What started and was embraced by a subset of consumers searching for more ways to budget and improve finances, BNPL is now a mainstream payments offering. Today, it is practically ubiquitous as virtually every large and midsize merchant has considered, is in the process of launching, or has already launched a BNPL solution.

According to Mercator Advisory Group, more than 50% of U.S. consumers have used a BNPL option in the past 12 to 14 months. In addition, 61% of respondents in PSCU’s 2021 Eye on Payments study who know their financial institution offers BNPL have used this option. Aite-Novarica’s October 2021 Buy Now, Pay Later Market Overview Report notes installment solutions offered by seven of the leading BNPL vendors are currently serving more than 800,000 merchants and over 100 million consumers. At the end of 2020, BNPL spend in retail eCommerce was projected to grow to more than $1.2 trillion by 2024, a 25% compound annual growth rate (CAGR). Total BNPL spend by that point, however, is likely to be even higher than originally projected when considering the recent expansion of BNPL offerings.

While BNPL solutions have hit the mark, it is too early to predict what impacts — positive or negative — cryptocurrency might have on credit unions and the broader payments industry. While there has been an increase in interest among consumers about crypto, there are still many unknowns and questions to be answered as to if/when it will become a more mainstream payments offering. Financial institutions are determining how to best meet current consumer needs in the space as legislation and other regulations surrounding crypto and its use continue to evolve. While consumer interest in cryptocurrency continues to grow, it will be important for credit unions to explore opportunities with partners to help them make strategic decisions around crypto offerings.

It is also wise for financial institutions to keep a close pulse on changes that might result from the current geopolitical climate. As we experienced with the COVID-19 pandemic, certain offerings — including mobile and digital banking solutions and contactless cards — skyrocketed in popularity and are now standard preferences, fundamentally changing the way in which consumers interact with their financial institutions. The current global uncertainty could have similar lasting impacts and credit unions should carefully monitor these trends, adjusting strategies and offerings as needed to maintain their members’ trust.