Admitting Conventional Banks into the BNPL Party

Splitit, the world’s largest card-linked installment platform that supports thousands of merchants and millions of shoppers, has officially announced the launch of FI-PayLater, which is designed to help Splitit’s network of merchant network of banks and card issuers (FIs) access comprehensive installment plans. According to certain reports, the stated solution comes decked up with an ability to let FIs connect directly into Splitit, or connect via their existing card network, to drive incremental lending and fee income from BNPL use cases. To understand the significance of such a development, though, we must acknowledge how financial institutions (FIs) have long struggled to unlock flexible payment options for their customers during the purchase journey, with available options never going past typical “post-purchase” installment plans that allow cardholders to split the cost of large purchases after they receive their statements. Such a setup, on its part, has kept them from tapping into the impulsive “during purchase” BNPL opportunity, successfully dominated by new-age fintech companies. Fortunately, FI-PayLater addresses that gap by enabling these organizations to offer their existing customers installment plans directly at checkout, thereby enhancing their brand presence. For customers, this also means more choices from their trusted bank.

“By enabling FIs to present compelling installment offers to their customers at the merchant checkout, we enable FIs to become relevant within the ‘during purchase’ installment market. Additionally, giving issuers the ability to pre-fund the merchants and charge the shopper driving new fee income in the environment of regulated interchange,” said Nandan Sheth, CEO of Splitit. “We’re allowing FIs to capitalize on their inherent advantages of scale, trust, and available credit within the installment economy.”

Talk about the whole value proposition on a slightly deeper level, it begins from a unified merchant facing API standard; eCommerce plugins, POS SDK’s, and a single entry point for multiple FI installment programs. Next up, we have an end-to-end modern experience in play, an experience which uses streamlining of checkout proceedings to emphasize the given FI brand, and therefore, optimize sales conversion. Then, there is one-click installment section were, markedly enough, you are allowed to checkout with customizable preferences for things like plan duration. Joining the same would be AI-powered waterfall that brings with it dynamic shopper fees, on-demand card art, and risk parameters unique to each FI. The solution in question is also well-equipped to deliver at your disposal embedded network installment programs, including Visa’s (VIS) and MasterCard Installments.

“Many FIs have expressed a strong desire for this type of solution, and we’ve responded by delivering it. Our single entry point and extensive network of merchant endpoints make FI-PayLater the easiest and most effective pay-later option for issuers to adopt, integrate, and operate across all consumer touchpoints, allowing us to lead the market and improve the economic model for all involved,” said Collin Flotta, Head of Product at Splitit.

Hold on, there is more, considering we still haven’t mentioned the optionality this whole product will generate for FIs or Splitit to pre-fund the merchant, and collect the installments from the shopper. Another detail we haven’t really acknowledged yet would be the presence of a dedicated merchant portal where you can access services related to reporting, exception management, and parameter setting across all participating issuers. Beyond the merchant portal, Splitit’s latest brainchild also brings to the fore an issuer portal. This portal lets you enjoy facilities related to reporting, transaction research, and plan configuration options.

The overarching development here delivers a rather interesting follow-up to one PYMNTS research, which claims that 70% of current BNPL users would be interested in using BNPL plans from their banks.