On the verge of the battle between the giants, MasterCard has recently announced its expansion into BNPL products.

It’s clear and obvious that despite being the infrastructure company, often working at the back, the company is slowly gliding out of the back-end targeting companies that a regular user is familiar with. FinTech’s, but not really, rather incumbents like Klarna and PayPal will have to welcome the new “big guy” in the room.

Some experts such as Eric Johansson agree that big brands are jumping to the back of the train in order to monetise on the growth, rather than pay for it later.

Why now?

Size: MasterCard is a sleeping giant that understands that it is worth joining the market now, otherwise it might be late.

Hype: BNPL industry is in the rapid growth phase and this might add up to the capitalisation of MasterCard

Affordability: launching a new product is a considerably inexpensive matter, compared to the potential outcome.

Does JO1N see MasterCard as a competitor?

Absolutely not. JO1N’s business model is a combination of the expertise and carefully considered business model that has been successfully verified across multiple markets. However, it is interesting to point that depending on the realisation of the short to middle-term plans, even an idea of working with MasterCard does not seem impossible.

Whats will happen to smaller direct BNPL lenders?

Not a surprise that smaller players will have tough times in the recent future. Despite the “free venture capital” time are not over, however, the doors are open only to the start-ups that have previously exhibited strong tractions. Thus, the only way of surviving in the scarce market conditions is to differentiate the offering.

Another potential scenario is a rapid market consolidation by large players. Leaving is with just a dozen of active industry players. Recent acquisitions in the space, such as the Afterpay acquisition by Square and the “deep” partnership between Amazon and Affirm, moreover Zip’s haul over the planed and pinpointed acquisitions add to the subject.

Who knows, whatever happens to the BNPL, it is not going anywhere for the present moment. And as it goes in the old saying “Consumer finance is dead. Long live consumer finance.”

Other notable news from the BNPL industry over the last months

– Facebook is launching its mobile wallet in the US aiming to compete with PayPal and Square (and its recent BNPL acquisitions Afterpay). Moreover, Facebook Australia launches ‘Facebook Pay’ service linked to customers debit/credit card or PayPal – yet another competitor for small transactions.

– PayPal discards late fees in all global markets – a direct threat to 20% of BNPL revenues. 

– Amazon trials Affirm in the USA, a limited number of (younger) consumers and only at payment gateway.

– CBA’s StepPay hits the market – initial results appear to be very good, 168,000 on waitlist – CBA have 4 million customers in Australia plus ASB in New Zealand.

– Big losses reported by Afterpay, Klarna and Zip, over $1.1 billion – Zip might run out of cash within 8 months; hence we might expect other potential venture rounds and acquisitions on the middle market

– Payright – not the results that the market expected, due to the growing operational and credit losses, however, the customer number seems steadily increasing. 

– Splitit – Loss doubles and CEO departs; a further business model improvement is currently discussed internally.

– Sezzle – Credit losses increase, loss widens and doubtful debt provisions double to nearly half revenue.

– Suncorp Australia launches Visa BNPL.

– PayPal buys Japanese BNPL company Paidy US$2.7 billion – buying 6 million users and 700,000 merchants

– Capital One – says it will test BNPL as part of its card offer – interesting given 9 months ago Cap One stopped processing Klarna BNPL payments linked to credit cards

 – Fintechs Revolut, Monzo and Curve announce plans to launch BNPL – a pure interchange play by these prepaid issuing neo banks – yet another reason to increases losses

– Goldman Sacs buys POS lender GreenSky which offers loans for services. Yet another interesting company to follow on the stock exchange market.

– JP Morgan hints at BNPL offers. Head of Consumer hinted that JP Morgan would offer its own BNPL products being developed.

– Mastercard announces a global push in 2022 starting in USA, UK and Australia has partnered with major processes like FIS, Synchrony, Marqeta, Huntingtons, Barclays and Fifth Third Bank.