The Future of Buy Now Pay Later

As Buy Now Pay Later (BNPL) matures and becomes a bigger part of the payment ecosystem, we can expect it to provide increased payment options for consumers, be compared to other payment vehicles, and face similar regulations and standards. Recently, Equifax and TransUnion added BNPL payments to credit reports with Equifax stating that this will give “a fuller picture of people’s financial commitments, like how much they owe on these plans,” and even increase consumers’ credit scores.

The PositivityTech® Intelligent Platform reveals early insights about BNPL based on customer complaints that are critical to developing and adjusting policies and practices to minimize risk and strengthen BNPL. 

What are people complaining about?

In a recent American Banker article by journalist Kate Fitzgerald, I shared that BNPL complaints are on the rise — and have been so since the first quarter of 2021. Below, you can see that customers are complaining about four main issues, with excerpts from such complaints to the Consumer Financial Protection Bureau (CFPB):

  1. BNPL products often carry fees.
  2. Returning merchandise bought with BNPL loans can be complicated.
  3. BNPL loans have fewer protections than credit cards.
  4. BNPL loans’ impact on credit scores isn’t clear.

A look at the issues that BNPL companies are facing

While the CFPB is beginning to highlight BNPL risks, PositivityTech has revealed a steep rise in customer complaints about BNPL to Affirm.

Using PositivityTech’s proprietary tools, we compare customers’ complaints about different companies. 

For example, our Severity Score highlights that the customer narrative to Klarna is more “severe” than other BNPL complaints. Our Debt Collection Model identifies the debt collection issues and their connection and impact on credit decisioning at Affirm.

  • 70% of Affirm’s issues are within three categories: credit reporting, debt collection, and problem while making a payment. The following complaint, identified by PositivityTech’s proprietary Debt Collection Model, reveals the relationship of debt collection to credit reporting.
  • Klarna’s customer complaints show the highest level of frustration, based on PositivityTech’s proprietary Severity Score. 

The future of BNPL

This is just the beginning for BNPL. Becoming a greater part of the payment ecosystem requires standardization, reporting, and monitoring — and benefits both customers and institutions. By monitoring customer complaints about BNPL and identifying early indicators of risk using algorithms based on customer narratives, PositivityTech makes it possible for BNPL companies to pinpoint opportunities and areas for improvement, and to turn negatives into positives.