Disruption of BNPL in Consumer Finance: What strategic options do incumbents have?

Francesco Burelli
Steven Jacob
Torben Lötje
Jannik Lücking
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Buy Now Pay Later (BNPL): A Global Phenomenon

BNPL is a global phenomenon of growing relevance within the consumer credit industry. While the product features of the underlying financing solutions are identical compared to incumbents’ offerings, the integration at the POS, the short-term nature of the product, and the merchant subsidization are making it appealing to consumers to pay for impulse purchases.

Additionally, merchants increase their conversion rates, basket size, and average purchase amount by integrating BNPL offerings. Nevertheless, BNPL providers expect new challenges in the short and medium term due to regulation, underlying credit risks, and an emerging conflict of interest with merchants.

Banks and issuers will have the opportunity to revise their strategic propositions and to leverage their existing assets against this competitive threat.

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