Mastercard enters BNPL arena. First in the U.S., Australia and the UK.

BNPL solutions have been shown to increase average sales by 45 percent and reduce cart abandonment by 35 percent post-implementation*.  New Buy Now, Pay Later (BNPL) program gives consumers a flexible, ubiquitous way to pay online and in-store through equal, interest-free installments – an additional choice to debit, credit or prepaid cards.

Mastercard Installments BNPL program to come to market in the U.S., Australia and the UK. Mastercard to work with Barclays US, Fifth Third, FIS, Galileo, Huntington, Marqeta, SoFi, and Synchrony in the U.S., and with Qantas Loyalty and Latitude in Australia on the BNPL program.

Mastercard today unveiled Mastercard Installments, „a unique and innovative Buy Now, Pay Later (BNPL) program that delivers greater choice at checkout, both in-store and online,” according to the press release.

Mastercard Installments uses the power of the company’s trusted network to make BNPL available to millions of consumers and merchants worldwide. It enables banks, lenders, fintechs, and wallets to offer a variety of flexible installment options to consumers – including a zero percent interest, pay-in-four model – without onerous integration into the merchant infrastructure, allowing them to quickly offer secure and competitive BNPL experiences at scale.

Mastercard Installments enables consumers to digitally access BNPL offers, either pre-approved through their lender’s mobile banking app or through instant approval during checkout.

Pre-approved installments can be used directly on a merchant’s website, and can be stored in digital wallets including Click-to-Pay, to then be used online or in-store wherever Mastercard is accepted. Instant approvals during checkout will be available through Click-to-Pay shortly after launch.

Consumers will have full transparency on lender practices up-front during the approval process, and unlike most current BNPL offerings, consumers will continue to benefit from zero liability fraud protection, the ability to challenge unrecognized charges, and the peace of mind that comes with Mastercard’s acceptance footprint.

“At the heart of it, payments come down to choice – and people want more from their money with greater flexibility and control in how they pay and where they shop,” said Craig Vosburg, Chief Product Officer, Mastercard. “Mastercard Installments has been built on our guiding principles to protect consumers and enable choice without sacrificing trust and security. It is a digital-focused way to pay today and tomorrow, delivered through consumer’s most trusted relationships with their banks and other lenders, at merchants of their choice.”

Mastercard Installments builds on Mastercard’s investments in open banking that help deliver a simple and convenient experience for consumers, merchants and lenders. As an elective option for lenders, with consumer consent, account-level transaction histories can be considered as part of the underwriting process, enabling credit to be safely extended to a greater number of shoppers.

Mastercard Installments provides ubiquitous acceptance backed by zero liability fraud protection, „not yet available through most current BNPL offerings,” the company says.

Digital wallets and BNPL players can easily integrate Mastercard Installments’ APIs and deploy the solution to consumers and already integrated merchants, extending reach beyond their existing footprint. Mastercard Installments is embedded in the core Mastercard network, which means there is no longer a need for wallets and BNPL players to build direct settlement arrangements with merchants or acquirers. BNPL providers can also supplement their existing networks with additional merchant acceptance.

Fueled by changing consumer spending habits during the pandemic, BNPL adoption continues to accelerate globally. In addition to consumer demand, the momentum is being driven by issuer and merchant desire to deliver new, complementary ways for consumers to shop both in-store and online.

Mastercard Installments will also provide access and support to a new suite of APIs to power each step of the BNPL journey; from installment calculation to multiple repayment options, all delivered securely and at a global scale through the Mastercard multi-rail network.

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*Source: Study conducted using Mastercard transaction data; October 2020