Although Buy Now Pay Later (BNPL) is still in its nascent in the financing industry, it has already established itself as a leader in consumer financing and has a huge impact on retail financing. Its popularity has grown over the past few years. Researchers believe that the trend will continue and grow in consumer popularity over the coming years. It prompted businesses from other industries to replicate the BNPL services on their own, giving customers financing alternatives directly from them rather than through third parties. Large technology businesses decided to enter the fierce rivalry of BNPL financing.
What Dangers it may Bring
The decision by Apple, one of the top big tech companies, to use the BNPL loan services has alarmed US consumer finance regulators. Even if Apple is the only tech company using consumer financing, we can be confident that it will encourage other businesses to follow suit. However, further adoptions could push the market toward risks associated with consumer financing.
Large big tech businesses have access to a vast amount of customer data. Rohit Chopra, director of the Consumer Financial Protection Bureau, has already spoken about his concern regarding this issue and is confident that it will cause some issues in the industry.
As Rohit Chopra said, it is almost impossible to predict the exact risks and situations it may bring, however, it is essential to warn the leaders of the market that the huge changes in the industry are unavoidable.
Apple’s BNPL Solution
Apple has chosen to implement consumer financing services, giving its customers access to six-month installment loans with a total of four payments. One of the payment plans that consumers find the most appealing is this one. In the beginning, they add the MasterCard services on top of the existing Apple Pay option. On their end, Apple stated that they are pleased to provide updated systems to their customers who are already utilizing BNPL lending services. By doing this, they are improving the consumer financing experience and enabling customers to use better options and obtain financing for Apple products more simply and comfortably.
Apple also stated that they are ready to work with all the BNPL regulations from CFPB (Consumer Financial Protection Bureau) and work with them in the future to make sure that all the business is done properly.
New BNPL Regulations from CFPB
The CFPB has been actively working since last year. First, they inquired about the flow of consumer data from major Fintech firms to determine how they collect and use customer data. The second stage was to request information regarding financing patterns and data on customer behavior from the market leaders at the beginning of this year. This year, the newly assessed figures will be released.
Because of worries about potential dangers to consumers in the future, the CFPB has completed all of its work. The new generation, who are the primary customers of consumer financing, may end up with a huge amount of debt as more people use BNPL lending options and new businesses are interested in implementing consumer financing options. It has become standard practice for young consumers, who have low incomes or no credit history, to obtain credit cards and use BNPL services as their credit options. In the end, the Protection Bureau is worried that when Big Tech companies enter the financing sector, customers will experience more issues.
Predictions of BNPL
Chopra was chosen to head the CFPB campaign beginning in September because numerous current and potential problems make consumer financing problematic for users. It makes sense because Apple will be launching its Buy Now Pay Later services at the same time. We may anticipate seeing the new BNPL regulations put into practice more frequently. Regulators will need to work more quickly and strategically as the big businesses swarm the sector. There is no doubt that BNPL loan services are a crucial tool for consumers, but additional BNPL laws will occasionally be required to ensure that Fintech businesses are operating lawfully and that consumers are protected.
What should the Existing Leaders do?
Even while many new uncontrolled Fintech startups or Apple’s endorsement of BNPL services may discuss the current concerns, the new BNPL laws will also have an impact on the market’s established global lending platforms. ChargeAfter, one of the industry leaders, is continually improving its platform to give customers and merchants the finest services possible so they can maintain their leadership. Regulations may not have a significant influence on businesses like ChargeAfter because it never assessed additional fees to customers, but ChargeAfter is continually working to add new features and improve existing ones. Because of this, the business opted to embrace superior BNPL white label services and add more lenders on the market, to make sure that the consumers of the retailers who use the financing platform of ChargeAfter, get the most relevant consumer financing options.
Summary
In conclusion, it is true that the regulators are worried about the popularity of BNPLs growing at an alarming rate. Apple’s BNPL services caused them to reflect and begin developing new BNPL laws that will help consumers feel secure in the vast array of consumer financing options available.
About ChargeAfter
ChargeAfter is a leading multi-lender platform for Buy Now pay later (BNPL) Consumer Financing. It connects businesses with the most reliable lenders, enabling them to offer customers the greatest financing solutions. With the best system of Waterfall Financing, ChargeAfter guarantees BNPL lending to every shopper, by matching the most relevant lender to every client. Using the unique consumer financing technology, ChargeAfter provides all parties, merchants, lenders, and consumers, with the best shopping experience. Phoenix, MUFG, VISA, Bradesco, BBVA, Synchrony, PICO Partners, CITI, Propel Venture Partners, Plug and Play, and other companies worldwide are among the investors of ChargeAfter.