Dive Brief:
- Credit card giant Mastercard announced in a Tuesday press release it's launching a new buy now-pay later service that will let consumers pay for goods online and in stores in four installments, without any interest rate fees. A company spokeswoman said the new payment option would be rolled out next year.
- Mastercard is locking arms with some of the biggest names in payments to offer the new service, including payments processor FIS, card issuer Synchrony, banking behemoth Barclays and modern card company Marqeta, it said in the release.
- The new Mastercard way to pay will start in the U.S., Australia and the United Kingdom in the first quarter of next year, and later will be spread during the year to millions of additional merchants who accept the company's cards worldwide.
Dive Insight:
While some legacy companies have said in the past that they didn't need to jump on the BNPL bandwagon, clearly Mastercard's announcement shows the worldwide trend is now taking on board even major legacy companies.
Purchase, New York-based Mastercard said today that adding this new service, called Mastercard Installments, for card and real-time payments will give merchants and consumers more options for check-out at a time when they are demanding it.
The trend that started in Australia spread quickly to Europe and has been growing in recent years into a global craze as merchants acknowledged that the sometimes higher fees they pay for the credit service also results in bigger purchases and more return business.
A Juniper Research study published this year estimated the new payment method could account for $995 billion in sales by 2026.
"Mastercard Installments has been built on our guiding principles to protect consumers and enable choice without sacrificing trust and security," Mastercard Chief Product Officer Craig Vosburg said. "It's a digital-focused way to pay today and tomorrow, delivered through consumer's most trusted relationships with their banks and other lenders, at merchants of their choice."
The company said the new BNPL installment choice will have to be pre-approved beforehand, with value stored in a digital wallet, prior to it being used online or in-store wherever Mastercard's cards are accepted.
"Instant approvals during checkout will be available through Click-to-Pay shortly after launch," Mastercard said in the release. "Consumers will have full transparency on lender practices up-front during the approval process, and unlike most current BNPL offerings, consumers will continue to benefit from zero liability fraud protection, the ability to challenge unrecognized charges, and the peace of mind that comes with Mastercard's acceptance footprint."
Mastercard said it will make the new service available "without onerous integration into the merchant infrastructure, allowing them to quickly offer secure and competitive BNPL experiences at scale."
Banks will be able to offer the installment option to merchants with "minimal, simple integration," the release said. In addition to Barclays, Fifth Third will also participate in the new Mastercard program.
Software developers and other companies creating BNPL options can join in as well. "Digital wallets and BNPL players can easily integrate Mastercard Installments' APIs and deploy the solution to consumers and already integrated merchants," the release said.
