Mastercard Inc. launched a buy-now, pay-later service on Tuesday, aiming to tap into a market that threatens to erode credit cards’ dominance as a primary payment method.
During the COVID-19 epidemic, the buy now, pay later sector grew in popularity as cash-strapped buyers were attracted to the service’s simplicity of making part-payments for things purchased online or in stores without incurring additional costs or taxes.
This has resulted in a rise in activity for some of the market’s major participants, including Klarna, Affirm Holdings, Afterpay Ltd, and PayPal Holdings Inc, as well as a slew of large acquisition agreements.
In August, Square Inc, the payments company founded by Twitter Inc co-founder Jack Dorsey, paid $29 billion for Afterpay, while PayPal announced earlier in September that it would pay $2.7 billion for Japanese BNPL business Paidy.
On Tuesday, Mastercard announced that its Mastercard Installments program will allow customers to pay for online and in-store purchases in equal and interest-free instalments in markets across the United States, the United Kingdom, and Australia.
According to Mastercard, the purchase now, pay later option allows banks, lenders, fintech firms, and wallets to offer BNPL solutions. Customers will also be able to take advantage of such offers digitally, with pre-approval using the lender’s mobile banking app or instant acceptance after checkout, according to the statement.
Companies that provide purchase now, pay later services often charge retailers a fee for providing clients with small, point-of-sale loans that are repaid in interest-free instalments, skipping credit checks. Apple Inc and Goldman Sachs are also apparently working on a BNPL offering.
Recall that, MasterCard, the world’s largest electronic payment firm, has maintained its seal of approval on the quality of cards made by Electronic Pay plus (Epay Plus) Limited, Nigeria’s top smart card maker and payment solution provider.
Epay Plus, a member of the Major Cards Manufacturers Association (ICMA), recently announced a collaboration with American Express, another international electronic payment business, to manufacture smart cards in Nigeria.