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Debunking some of the buy now pay later myths

February 18, 2021

It’s always interesting to read reviews and feedback on retail finance providers, those providing consumers with the opportunity to either split payment over a period of time or effectively take out a loan to cover the cost of larger items.   

As we have already discussed in How 2020 has changed retail finance forever, the industry is experiencing a surge towards consumer finance. Merchants are either looking to offer this kind of payment method to their customer base for the first time or simply fine tune and upgrade their existing offering.  

A recent article by credit checker, ClearScore, addressed some of the ‘myths’ surrounding the lucrative buy now pay later marketplace in, The pros and cons of 'buy now, pay later' credit.  

Being clear on buy now pay later   

In the article, ClearScore explains: “'Buy now, pay later' credit is the latest payment trend to sweep the nation, allowing people to spread the cost of their online purchases. Companies such as PayPal Credit, Klarna and Clearpay are making it easy to buy now and pay later at a huge range of fashion, furniture and electrical retailers.”  

We agree with much of the “there’s no such thing as a free lunch” sentiment, because the more you stick to the rules and deadlines associated with a buy now pay later product, the more financial advantageous it is. The flip side can be costly.  

Yes, be wary of late payment fees and penalties (the article clearly makes this point) but responsible providers should have in place a rigid and robust communication process that keeps consumers informed and aware of when payments are due and the implications of those payments being late.  

Responsible lenders in consumer finance  

Take one of the Deko lender partners, Zip. There are no commitments or upfront costs, and if late fees do come into play, they’re capped to help the consumer maintain a level of control.   

However, the article also mentions that applying for credit can result in a “hard search against your report”, referring to a potentially negative impact on credit score.  

Not so with the Deko Will I Qualify product, or with our buy now pay later offering, Zip Pay in 4

Will I Qualify is our custom-built credit checking platform that takes seconds to qualify customers for credit. It’s designed to streamline the credit application process without leaving a trace on the customer’s credit history.   

So, important to note that not all customers should worry about going through a credit check.   

Is choice the key to increasing acceptance rates?   

Acceptance rates are also a significant talking point in the retail finance world, and this is something covered off in the ClearScore article. While it’s true that “not everyone is accepted” it’s not quite as clear cut as this.   

The forward-thinking retailers are actually helping consumers get access to more choice when it come to finance, and those who may not be eligible from one lender may well be acceptable to another – albeit on different terms.  

Deko, for instance, is a multi-lender retail finance platform which means we are able to offer consumers of merchants who work with us a choice of finance when they look to spread payments. Retail finance simply doesn’t have to be the ‘computer says no’, one dimensional tool that it is often made out to be.  

The point is, consumer finance has evolved and realigned itself with an ever-growing customer network. It’s too easy to say that products on offer impact credit scores and minimise acceptance. From our perspective, we’re working hard to be the retail finance partner that does say ‘yes’ more often, and that doesn’t disrupt, disturb or leave a trace on credit history because that’s in line with consumer demands.  

The question for the merchant audience is: Are you giving your customers what they want?  

Want to find out more about the Deko’s multi-lender, multi-product retail finance platform? Either email us on sales@dekopay.com or take a look at the consumer finance products on offer and fill out a short form. Our expert team will be in touch to discuss.   

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