Financial technology provider PYMTS and Amount study findings have determined buy now, pay later (BNPL) users prefer versions of the service through their bank rather than through a fintech provider.
“BNPL products do not offer the standard consumer protections required of credit card providers or other regulated lenders, and their opacity regarding fees and repayment terms could easily place unwitting consumers into harmful, unaffordable debt,” Center For Responsible Lending (CRL) President Mike Calhoun detailed in an op-ed offering. “Regulators should ensure that BNPL lenders make loans only after determining the borrower’s ability to repay.”
The survey addressed over 2000 domestic consumers and concluded banks have a unique opportunity to increase their market share in the expanding BNPL market.
According to the survey, over 70 percent of current-user respondents indicated they would be more interested in using bank-backed BNPL products compared to offerings supported by fintechs. Nearly 43 percent of consumers expressed similar receptiveness to using a bank-backed BNPL product, and 80 percent of respondents preferred a BNPL product issued through their bank.
“Unaffordable credit may provide a quick inflow of cash, but over the longer term — which, in the case of BNPL, can be just a few weeks or months down the road — unregulated fintech products can add to the debt burden of consumers already overextended by debt,” Calhoun concluded. “The time for regulators to rein in BNPL is now.”