Five questions about card-based BNPL 

Since Sileon’s product expansion with a Trial Account for self-onboarding, the demand for testing our card-based BNPL Platform has experienced a severe increased demand. In line with the elevated interest, many questions have arisen. Take a look at our five most frequently asked questions so far:

1. Why is the focus on BNPL for cards?

BNPL is the next wave of digitalization of consumer credit. Despite BNPL providers gaining market share in the industry, consumer preference is still within the banks. In fact, 70% of current BNPL users would be interested in BNPL plans through their bank if such an option was available. The interest for bank-issued BNPL among consumers not currently using the payment trend has also increased, where 36% have expressed interest in BNPL products offered by their bank.

That BNPL is quickly gaining traction worldwide does not, however, understate that cards, whether they be physical or virtual, still remain one of the most popular payment methods. By adding BNPL to the existing card base, banks have an opportunity to regain market share loss, increase their revenue and attract the younger generation of consumers demanding flexible and digitalized payment methods.

For consumers, card-based BNPL plans embedded in a bank app are highly favourable as well. For example, it eases personal financing, allowing consumers to get more control of their expenses, whether they are planned or unexpected, and caters to a simplified omnichannel banking experience.

2. Why don’t banks just build a BNPL Platform in-house instead of partnering with a card-based BNPL software supplier?

As complex old legacy systems often hinder banks, they tend to struggle to keep up with the digitalization trends. Besides, letting in-house developers devote significant time and resources to create a BNPL Platform is highly expensive, time-consuming and complicated.

If partnering with a BNPL software supplier, like Sileon, time to market is drastically improved as only one integration is necessary. This means that you can bypass complex checkout and POS infrastructure and start growing your card business revenue within a matter of weeks. In addition, partnering with a BNPL software supplier enables you to save heavily on tech and resources.

3. Does Sileon offer funding?

Sileon does not offer funding. Customers using Sileon’s card-based BNPL SaaS tech are the ones responsible for the funding. Therefore, they are the ones making a profit on the credit financing and thus also take the risks associated with extending credit.

4. What type of revenue can one expect by integrating Sileon’s card-based BNPL SaaS technology?

Did you know that the number of global BNPL users is expected to surpass 1.5 billion by 2026? Nevertheless, the amount of BNPL plans, i.e., how often an end user decides to convert a card purchase into an instalment, depends widely on what type of industry your card business serves and the demographic of the end users.

To give an example, a card issuing fintech with 1 million credit cards in circulation could, based on industry standards, expect 50 million yearly transactions. That would result in 1.750 million BNPL plans and nearly €44 million in BNPL revenue annually. For an established bank, however, it could accumulate roughly €900 million in BNPL revenue annually. If you want to estimate the BNPL revenue for your specific card business, we suggest you take a look at our BNPL calculator.

5. How do you enable a sustainable card-based BNPL model?

A sustainable BNPL model is imperative to establish responsible consumer lending and staying in line with regulatory compliance. We believe the best way towards a sustainable BNPL landscape is to find a balance between making BNPL more accessible while promoting full transparency and responsible lending.

To enhance the BNPL model for credit and debit cards further, we will launch a Smart BNPL Solution module in 2024. The Solution module will accommodate the BNPL SaaS Platform and allow banks and card issuers to offer sustainable BNPL by targeting or excluding offerings based on different parameters. For example, a bank can enable, but also disable BNPL when needed, e.g., for a specific merchant or industry.

Want to get the look and feel of how Sileon’s BNPL SaaS Platform works? Request a Trial Account or book a demo to get started.