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Mastercard joins the buy now, pay later fever

The buy now, pay later option enables banks, lenders, fintech firms, and wallets the ability to offer BNPL solutions

Credit card is seen in front of displayed Mastercard logo. Photo: REUTERS/Dado Ruvic/Illustration/File photo
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  • Mastercard said on Tuesday its Mastercard Installments program will allow consumers to pay for online and in-store purchases through equal and interest-free installments, adding that it will be available in markets across the United States, the United Kingdom, and Australia;
  • Besides B2B integrations, the company’s solution will also allow customers to access such offers digitally, pre-approved through the lender’s mobile banking app or through instant approval during checkout.

Mastercard on Tuesday launched a buy now, pay later service, tapping into a market that is threatening to chip away at the dominance of credit cards as a main source of payments.

The buy now, pay later sector got a boost during the COVID-19 pandemic as cash-strapped shoppers were attracted to the service due to the ease of making part-payments for products they bought online or at stores, without additional costs or fees.

READ ALSO: Buy Now Pay Later (BNPL) ignites e-commerce in Latin America and beyond

That, in turn, has led to a surge in business at some of the biggest players in the market, including Klarna, Affirm Holdings, Afterpay, and PayPal, while driving a string of big takeover deals.

In August, Square— the payments firm of Twitter co-founder Jack Dorsey — bought Afterpay in a $29 billion deal, while earlier in September, PayPal said it would acquire Japanese BNPL firm Paidy in a $2.7 billion deal.

Mastercard said on Tuesday its Mastercard Installments program will allow consumers to pay for online and in-store purchases through equal and interest-free installments, adding that it will be available in markets across the United States, the United Kingdom, and Australia.

READ ALSO: Colombian ADDI raises $75 million to scale its Buy Now Pay Later solution in Brazil

The buy now, pay later option enables banks, lenders, fintech firms, and wallets the ability to offer BNPL solutions, Mastercard said. Customers will also be able to access such offers digitally, pre-approved through the lender’s mobile banking app or through instant approval during checkout, it said.

Companies offering buy now, pay later services typically charge merchants a fee for offering small, point-of-sale loans to customers which are paid back in interest-free installments, bypassing credit checks in the process.

Other large companies such as Apple and Goldman Sachs are also reportedly working on a BNPL offering.

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