Mastercard is making its move into the Buy Now, Pay Later (BNPL) battleground, but those expecting a direct rival from market leaders like Afterpay and Zip might be disappointed.
Instead, the payments processing company is opting to launch a program that promises to help banks, lenders, fintechs and wallets to launch their own bespoke BNPL offerings via Mastercard’s payments processing infrastructure.
Lenders will have a number of different instalment options to choose from, including zero per cent interest and pay-in-four. Mastercard has said that it will even allow retailers to add a surcharge.
Essentially, the program will allow both traditional banks and more cutting-edge players in the fintech and digital wallets space to design and deploy their own BNPL products and services at scale.
Mastercard Installments will initially launch in Australia, the United States and the United Kingdom before expanding elsewhere.
Commenting on the news, Mastercard division president for Australasia Richard Wormald said that Australians have always valued greater choice, security and convenience in the way they pay, “so it’s no surprise that the country has been at the forefront of BNPL innovation.”
He said that Mastercard Installments builds on these foundations by enabling local banks, lenders, fintechs and merchants to customise their own BNPL model and provide customers with new ways to pay both in-store and online.
As opposed to many existing BNPL solutions, Mastercard Installments has two key advantages.
The first is scale. As it’s built atop the credit card giant’s existing payments processing infrastructure, it will be supported everywhere Mastercard already is. Mastercard won’t have to win over merchants when it comes to adding another way to pay, because they probably already support it.
The other benefit Mastercard is promising that will differentiate Mastercard Installments from the rest of the BNPL stable is an emphasis on security.
“Mastercard Installments has been built on our guiding principles to protect consumers and enable choice without sacrificing trust and security,” Mastercard CPO Craig Vosburg said.
Mr Vosburg said that the program builds on Mastercard’s previous investments in open banking.
“At the heart of it, payments come down to choice – and people want more from their money with greater flexibility and control in how they pay and where they shop,” he said.
Full details on how Mastercard Installments will work are expected to arrive in 2022.