The point of sale financing and buy now, pay later (BNPL) market is expected to grow 181 percent by 2024 according to the 2021 Global Payments Report by Worldpay from FIS. In fact, according to the same report, BNPL services rose nearly 78 percent in 2020—the biggest leap of all payment types and is projected to account for 4 percent of global eCommerce spend by 2024. The concept of pre-purchase, during purchase and post-purchase installment programs aren’t new, but the ease of use, flexibility, and mutual benefit they deliver at various phases of the value chain have made them one of the fastest growing segments in payments.

Financial institutions, regardless of size, need to offer these solutions in order to compete with alternative point of sale (POS) financing companines like Affirm, Klarna and Afterpay, and issuers like Chase, Citi and American Express—which all offer some iteration of a flexible repayment plan.

What is the real benefit of BNPL credit card solutions?

The need to make a large purchase can occur at any time and it is often in these unpredictable moments that consumers find themselves in an intense financial burden. Cars can breakdown, roofs can leak, and unexpected medical expenses can cause individual consumers and families to go through a time of uncertainty and experience financial anxiety. Post purchase installment solutions give cardholders the flexibility to make larger purchases and can increase card use and preference by offering cardholders more choice and control.

Issuers can use post-purchase installment loans to add additional functionality to their consumer cardholder portfolio, differentiate their offering, drive revenue, and expand debit cardholder relationships. There is already a public demand for these types of solutions as well. In fact, according to the 2020 FIS Generation Pay survey, 50% of consumers would use BNPL for a purchase under $250 and 41% said the same for a purchase between $250 and $999.

How do BNPL credit card solutions actually work?

After a cardholder makes a qualifying purchase, they will receive an alert giving them the option to turn their large purchase into smaller payments that can be paid over a set period of time. This allows cardholders to free up their cash flow and lessens the burden that would have been present if the purchase had to be made in one lump sum.

This financial flexibility gives cardholders piece of mind while providing enhanced card loyalty for the financial institution. Consumers will be more likely to keep the card that provides this flexibility top-of-wallet, specifically when it comes to their larger, unavoidable purchases.

Financial institutions that provide options for their cardholders to pick what is best for them can set their organization apart as one that provides a unique experience that puts the consumer first. Providing this individualized experience will only enhance the relationship that you have with your cardholders.