Visa challenges Mastercard, others with BNPL rollout

From the humble beginnings of the buy now, pay later space came strong contenders for the now multi-billion dollar industry. As of Tuesday, it’s got a new competitor: Visa.

The digital payments giant announced a partnership with banking tech solutions and provider i2c to launch a point of sale installments capability (a BNPL functionality) for their users in North America.

Coined “Visa Installments”, the tech enables issuers to offer installment plans for their cardholders under their existing credit account lines, and for participating merchants to display the installment plans to eligible cardholders. However, the tech does go both ways. Participating i2c issuers offering Visa credit cards will also have the capability of providing user with the BNPL option upon checkout.

“Customers love the flexibility of being able to pay over time with installments, as evidenced by the rapid growth in the space,” said Mary Kay Bowman, global head of buyer, seller, core and platform products at Visa. “At Visa, we’re working with partners like i2c to accelerate the distribution of more BNPL payment options for consumers, issuers and merchants around the world.”

BNPL’s popularity has exploded in recent years, even more so with the stay-at-home lifestyle the pandemic brought to the world.

As it would seem with many of these key BNPL players, acquisition is the name of the game. Based on data from Insider Intelligence, the three largest platforms by % of US based BNPL users are Klarna, Afterpay and Affirm – all of which have either made an acquisition or announced a major partnership in recent months. Klarna in particular claims almost half of all users at 48.6%, which means Visa is entering an already dominated field.

Not to say big fish can’t eventually be swallowed by a bigger one. Payments giant Square announced plans to buy Australian BNPL platform Afterpay for $29 billion (A$39 billion) two weeks ago.

Less than a month ago Visa acquired Currencycloud, a London-based developer that provides APIs for currency transfer and remittance services along with the 500 banks across 180 countries the platform supports.

A month before that, it scooped up European open-banking service provider Tink for $2.15 billion (€1.8 billion) and gave Visa a fast-track into Europe’s open banking market – which, has grown rapidly due to legislation allowing financial institutions to access customer data from competitors if authorized by the user.

However, Visa’s acquisitions hit a snag back in January when it officially announced an end to its proposed $5.3 billion merger with fintech company Plaid. In November, the Department of Justice (DOJ) sued to block Visa’s proposed purchase of Plaid, complaining that Visa was buying the company to eliminate a competitor in the lucrative business of online debit transactions. Visa had objected to the DOJ suit, arguing that Plaid is not a payments company and, therefore, is not a direct competitor.

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