Mastercard Inc launched a buy now, pay later service. This taps into a market that is threatening to chip away at the dominance of credit cards as a main source of payments. During this pandemic, the buy now, pay later sector got a boost. This is because of the ease of making part-payments for products they bought online or at stores. This led to a surge in business at some of the biggest players in the market. This includes Klarna, Affirm Holdings, Afterpay Ltd and PayPal Holdings Inc.
Square Inc, is the payments firm of Twitter Inc co-founder Jack Dorsey. This is bought Afterpay in a $29 billion deal. PayPal said that it would acquire Japanese BNPL firm Paidy in a $2.7 billion deal. Mastercard said that its Mastercard Installments program allows their consumers to pay for online and in-store purchases. Equal and interest-free installments are available for that. And also, it will be available in markets across the United States, the United Kingdom and Australia. The buy now, pay later option enables banks, lenders, fintech firms and wallets the ability to offer BNPL solutions. Customers have access to such offers digitally, pre-approved through the lender’s mobile banking app.
Companies offering buy now, pay later services typically charge merchants a fee, which is for offering small, point-of-sale loans to customers. This can be paid back in interest-free installments, bypassing credit checks in the process. Companies such as Apple Inc and Goldman Sachs are also reportedly working on a BNPL offering.