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BNPL: Differentiating in a Crowded Industry [Part 1]

By PerformLine
December 1, 2021
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This past October, PerformLine hosted a panel discussion at the Money20/20 USA conference with experts from Sezzle, Alliance Data, and Snap Finance titled "Innovations and Challenges Ahead for Lenders in the BNPL Era."

Over the next few weeks, we'll be releasing the top takeaways from the session in a weekly blog post. Today’s blog focuses on how BNPL firms can differentiate themselves in a crowded industry.

Creating Financial Empowerment for All Consumers

Those who are underrepresented by traditional financing options are now being marketed to with emerging options through BNPL products. BNPL financing options offer smaller installments over a set period that provides this group with access to more significant ticket items with limited underwriting. This is critical since the typical BNPL consumer either does not have a credit profile, has one that is primed-to-be or is subprime, or typically would not apply for a credit card. 

Chris Bixby, the Vice President of Growth at Sezzle, states:

“The thing that we saw through Gen Z and younger consumers is that they have been challenged by credit in the past and they are looking for different forms of coming into payments and that is where we provide our access—but what we also realized is that consumers need to build credit and long growth. 

So we are not anti-credit, we see the benefit of it, and in BNPL, there is typically no credit check. That is what allows us to bring it to a consumer base in high intervals. These are consumers that ultimately want to buy a house, or to buy a car, and are going to need a credit card for these times in their life. So, our partnership with TransUnion has allowed our consumers to opt-in to credit building, and it’s something that we feel is very important for helping that younger generation along.

We’ve also done things like financial empowerment and literacy programs that help educate and bring consumers along. Our partnership with TransUnion is all about what we see as a long-term cycle of credit and long-term graduation within the program, and also allows us to start reporting—which we do believe at some point that our industry may be regulated.”


There is a lot of buzz surrounding consumer protection in the regulatory environment and what the BNPL industry means for consumers. Brands such as Alliance Data, Snap Finance, and Sezzle, are shown to be consumer conscious and are actively helping the user on their journey to build better credit to have more financial options.

A Full Product Suite of Financing Options

Many traditional financing firms are seeing the emergence of BNPL options and are trying to make the decision of whether to enter the already crowded space. Rick Cunningham, SVP, Strategy and Business Development at Alliance Data shares his thoughts on the decision to enter the space through the acquisition of Bread.

“Alliance Data, for all those familiar, is a retail card-centric player. Our partners happen to be billions in revenue, e.g. mega merchants. A lot of those partners are brick and mortar-centric, so what’s happened in the past couple of years is a big shift in the spending power to Gen Y and Gen Z. As a result, we’re seeing 20% of total retail sales occurring through online channels. Today, a lot of retail is being enabled by Shopify, Woo Commerce, Big Commerce, etc., and because Alliance Data is a traditional retail credit card provider, we didn’t have access to that market, hence the acquisition of Bread.

When we acquire a company like Bread, we enter the arena overnight. We now have a full product suite so we can provide to a retail outlet, private label credit cards, co-brand credit cards, installment lending, and BNPL purchasing options. We also serve a full ticket spectrum, so we can support everything from small ticket on a BNPL purchase up to big-ticket financing on a private label credit card. 

It also benefits our risk spectrum, so we can serve a new credit file with a BNPL consumer, up to someone who’s more established with a private label credit card or co-brand credit card. It’s also a broader demographic that we can target, so we are picking up products for Gen Y and Gen Z. In about ten years, Gen Z will be the generation with the highest spending power, so for us, it was important to get in and find our way to scale by having this full spectrum of offerings. 

If you’re new and looking to get in you’re going to need to have a tech stack, you’re going to need to have a great omnichannel user experience, and you’re going to need to have risk and regulatory expertise.


Focus on Consumer Needs and Behavior 

As the industry becomes more crowded, we’re starting to see firms starting to narrow in on specific product focuses. 

Mylee Vigness, Head of Growth and Innovation at Snap Finance, found success by starting in concentrated verticals, such as home and auto products. She said: 

“At Snap, we started in concentrated verticals, which really helped us be successful and find early traction and scale.

However, the most important thing now is focusing on consumer needs and behaviors instead of staying within specific verticals. For example, through Snap, you can now finance a shirt, you can finance your jewelry, etc. and those options really have been driven by that change of behavior in consumers. 

The average dollar amount to get your financing is no longer $2,000, but closer to $20, and that’s more important I think for the success and the continuation of this type of offering out in the market versus having to have a concentration in specific verticals.”

The success and continuation of these different level offerings need to have a place in the BNPL space to present financial entry for all users. 

A marketing compliance monitoring platform that scales with you 

Whether you’re currently offering a BNPL financing option or are considering adding it to your product suite, it’s never too early to implement a scalable marketing compliance monitoring program. PerformLine is the #1 sales and marketing compliance platform in the BNPL industry, ensuring regulatory and brand compliance across merchants and channels for the top BNPL around the world. 

Learn More: https://industry.performline.com/buy-now-pay-later

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Tags: BNPL, BNPL Top Takeaways Series

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