Physical Merchants Get Assist In Riding BNPL Wave

Let’s enter the payments wayback machine. It’s 2007. “Shrek” and “Harry Potter” rule the box office. Beyonce dominates the pop charts. The iPhone is a brand-new product, and the “digital wallet” is seven years away with the 2014 introduction of Apple Pay.

Back then, real-time lending platform Wisetack’s CEO Bobby Tzekin had a front row seat to the coming payments revolution as senior manager of merchant services at PayPal. As he said in a conversation with PYMNTS, continued innovation was certainly an expectation for the payments space, but the explosive path it took to 2021 could hardly be predicted.

One of those innovations has been the rapid rise of buy now, pay later (BNPL). An issue Tzekin and Wisetack have been addressing lately is in finding ways to expand the BNPL model to as many business verticals as possible.

“There are businesses that are going to have difficulty using technology or using modern options around payments. A small business, someone like an electrical business with a dozen employees doesn’t necessarily have the resources to devote to sophisticated setups or to onboard payment providers,” Tzekin said, noting that these businesses lack an easy path to leverage BNPL.

Wisetack, he said, was developed to be that easy path for merchants. It’s an application programming interface (API)-based technology platform that makes it easy for them to create and launch a BNPL offering for their customers in “a few minutes.”

The power of PayPal a decade ago was that it made it easy for merchants to set up an account and get selling in a few minutes and for consumers to be set up for purchasing in the same short time span. Wisetack, he said, aims to bring the same innovative simplicity to real-world small- to medium-sized businesses (SMBs) when it comes to signing up for BNPL services.

These services are what consumers have made it incredibly clear that they want, and they will favor merchants who offer them, he said. Credit cards are an excellent way to pay for goods and services, but they are a terrible way to borrow because they are so essentially mysterious to consumers.

“I put a charge on my credit card, and I have no idea what that is going to mean for my bill at the end of the month,” Tzekin said. “And I have really good credit.”

That feeling that their debt is somehow going to become mysterious to them, possibly ruinously so, has become apparent in the decade since the Great Recession. It has left consumers, particularly younger consumers, extremely hesitant to take on massive shares of credit card debt. That means when those consumers face costly home or car repairs, they are forced to take on high interest credit card debt they don’t want or understand, or forgo necessary services because they don’t have the money on hand to pay for them.

The transparency and simplicity of BNPL installment offerings have proven to be persistently attractive to consumers as an alternative to revolving credit card debt, but an alternative that simply isn’t available enough in real-world SMB transactions where consumers might genuinely need them. But that, Tzekin said, is something that the last year alone has seen start to change abruptly.

“What we’ve observed from January of last year to January of this year — our monthly loan volume grew by 20 times,” Tzekin said. “Our merchant base actually grew by even more. We’re seeing enthusiasm for this exploding across the board. The most exciting part we’ve seen is how positive reactions have been.”

What is becoming quite clear is that BNPL offers speak to a genuine consumer need, he said. The space is getting to be competitive and crowded as the enthusiasm of consumers for a better way to pay has brought along a corresponding clamor for firms looking to meet that customer need and want.

“This is a generally friendlier way to borrow than incurring credit card debt,” he said. “The huge adoption and popularity come from the fact that the technology in the last decade is such that it has become an incredibly easy way to pay. It’s fast, it’s easy, and people understand what they’re signing up for.”

And, he said, Wisetack is avoiding the crowds rushing to serve the online masses by moving to the down-but-not-out physical world, which is newly invested in finding better ways to secure conversions and meet digital providers’ service offerings.

Wisetack, he said, is taking its own path into a market that has been underserved when it comes to BNPL but one where merchants are increasingly ready to jump on board to help consumers secure the big-ticket purchases that they need to make. The goal for 2021 will be growing the firm to meet what is turning out to be an impressive wave of demand.