Does Buy Now, Pay Later Threaten Credit Card Issuers?

Capital One recently announced that it would prohibit the use of its credit cards to finance buy-now-pay-later transactions. According to a Capital One spokesperson, BNPL buys"could be risky for clients and the banks that serve them."

In this guide, I will examine Capital One's claim.

Let’s see our product:

How It Works

Buy today, pay later allows approved clients -- online or in-store -- to defer the payment for goods and services. BNPL providers pay the merchant in full immediately, with no service fee. The client pays the BNPL supplier in agreed-upon payments charged to the client's credit card.

BNPL is a simpler, more transparent way for most consumers to consummate a purchase. Credit cards are plagued by hidden charges, compounding interest, and poorly-explained penalties. BNPL differs because rates, fees, and payment schedules are displayed clearly and explained in easy, customer-friendly terms. Significantly, there are no interest charges for the client.

For the merchant, accepting BNPL is very similar to credit cards. Merchants pay a commission to the BNPL supplier of 4 to 8 per cent, typically. The supplier settles directly with the merchant. The merchant gets the proceeds of the sale regardless of the amount of payments made by the customer.

BNPL fees (4 to 8% ) are considerably higher than credit cards. But, unlike credit cards, the BNPL supplier -- not the merchant -- carries the possibility of fraud and chargebacks. To put it differently, when it finishes a BNPL sale, the merchant can be sure it will get the payment even when the transaction is fraudulent.

BNPL Too Risky?

BNPL is apparently too risky for Capital One. Let's analyze.

Capital One has approximately 62 million credit card accounts under its management -- one of the biggest in the U.S. As an issuer, Capital One earns revenue by charging merchants an interchange fee and by charging consumers interest and interest on their credit card debt.

Issuers assume the risk of cardholders not paying the balance. Buy today, pay later increases that risk because issuers can't gain from interest and late fees. (Issuers also face competitive pressure, such as low-free debit cards, reloadable wallets, gift cards, and crypto-currencies.)

Capital One's announcement that BNPL"could be risky for clients and the banks that serve them" is true in a sense. Certainly BNPL is a simple way for customers to assume debt fast. All surplus personal debt -- credit card, BNPL, home mortgage is dangerous. However, there's very little difference to customers between credit cards and BNPL aside from the prior accrues interest and interest on outstanding balances.

What is unspoken in Capital One's statement is that it gathers only interchange fees from merchants when customers make BNPL purchases. But when customers take on credit card debt right, Capital One also collects interest and late fees.

Protecting Profits

In a nutshell, Capital One makes less money from BNPL than from direct credit card purchases. By minding its credit cards from financing BNPL transactions, Capital One is protecting profits.

Ecommerce Product Releases: December 15, 2020

Here's a list of product releases and upgrades for mid-December from businesses that provide solutions to online merchants. You will find updates on the yield and dispute procedures, fulfillment, personalization, contact centre services, and merchant banking.

Got an ecommerce product launch? Email releases@practicalecommerce.com.

Ecommerce Product Releases

WhatsApp introduces Carts. WhatsApp has introduced Carts to facilitate selling and buying on its platform. With users can get the things they need and tap"add to cart" Once the cart is finished, users can send it as a message to the enterprise. Carts will make it easier for companies to monitor order inquiries, handle requests from shoppers, and close sales.

https://www.connectpos.com/top-6-magento-wholesale-extensions/

https://www.connectpos.com/most-common-magento-2-issues-faced-by-online-store-owners/

https://www.connectpos.com/everything-you-need-to-know-about-sitecore/

https://www.connectpos.com/everything-you-need-to-know-about-woocommerce/

https://www.connectpos.com/quick-magento-tutorial-for-beginners/

https://www.connectpos.com/what-you-need-in-a-point-of-sale/

WhatsApp Carts

Stripe to provide banking services through Goldman Sachs and Citigroup. Stripe is teaming up with banks, such as Goldman Sachs and Citigroup, to provide checking accounts and other business-banking services. Processing payments for millions of internet companies and ecommerce platforms, Stripe will give its clients the choice of guaranteed, interest-bearing bank accounts, debit cards, and other cash-management services. These products are intended for the merchants and vendors that do business with Stripe's clients. One of the early adopters of Stripe's new banking solutions is Shopify, which will begin offering Shopify Balance accounts to its merchants early next year.

FedEx to acquire ShopRunner to enlarge ecommerce capabilities. FedEx Corp has agreed to acquire ShopRunner, a platform which connects brands and merchants with internet shoppers. ShopRunner's abilities will complement and expand the FedEx ecommerce portfolio. The parties expect the acquisition to close by the end of 2019. ShopRunner connects over 100 brands and merchants to millions of customers and provides a seamless shopping experience from surfing through shipping.

ShopRunner

Walmart streamlines reunite and dispute procedures . Walmart's market sellers are now able to initiate disputes straight from the payments dash in Seller Center rather than relying upon the Seller Help dispute procedure. Sellers can browse to Seller Center and browse to Payments > Analytics & Reports > Search Transactions. Sellers then enter the order number and all the essential information will automatically populate. The changes are supposed to simplify the disputes and returns procedure for Walmart's market sellers.

AWS announces five new capacities for Amazon Connect. Amazon Web Services announced five new capacities for Amazon Connect, its contact center support, that enhance agents' productivity and end-user experiences. According to Amazon, Link is simple to use, fast to deploy, and extremely scalable to help businesses of any size deliver superior customer service at a lower cost. The capacities announced give agents the right information at the perfect time, provide more personalized service, help supervisors impact customer connections during forecasts, and make it quicker to authenticate clients more rigorously, according, again, to Amazon.

AWS's Amazon Connect

BigCommerce partners with EPAM for business clients . BigCommerce, an open SaaS ecommerce platform, has announced a partnership with EPAM Systems, a worldwide provider of electronic platform technology and software development solutions. Throughout the venture, BigCommerce merchants will get access to EPAM's global experience in crafting customer-centric adventures across electronic touchpoints. EPAM is a founding member of the MACH Alliance, an independent group dedicated to enhancing education, development, and adoption of technologies infrastructures through API-first, cloud-native SaaS and headless technology. BigCommerce recently joined the MACH Alliance.

RichRelevance announces Shopify Plus connector. RichRelevance, a participant in artificial-intelligence-driven digital personalization, has declared that an out-of-the-box integration using Shopify Plus. Merchants may keep product catalogs, inventory, and pricing constantly updated. Clients get complete visibility with 24/7 monitoring and alarms for any mistakes or breakages.

ShipMonk increases $290 million to help online merchants scale operations. ShipMonk, an ecommerce fulfillment and technology provider, has raised $290 million in growth equity, led by Summit Partners. The funding represents a minority stake in the company and will further accelerate ShipMonk's rapid growth through continuing investment in research and development, hiring, B2B fulfillment, and international growth. ShipMonk's inventory management applications, automation technologies, and multichannel order fulfillment tools are designed to help companies scale fast.

ShipMonk

Optimove and Dynamic Yield combine multichannel capabilities with real time personalization. Optimove, a relationship marketing support, and Dynamic Yield, an experience optimization platform, have announced a strategic integration. Marketers can now leverage Optimove's multichannel orchestration and optimization capabilities with Dynamic Yield's real-time personalization technologies. This permits customers to merge all user information via Optimove and integrate engagement-level data recorded by Dynamic Yield from apps and websites, among other advantages.

Kenco Logistics launches ecommerce platform. Kenco, a third party logistics supplier for North America, has announced the launch of a platform to connect Kenco's ecommerce clients with sales channels and supply chain partners. The platform has over 200 pre-built integrations that will help brands improve their speed to market while reducing costs. These integrations include industry leaders like Shopify, BigCommerce, WooCommerce, Amazon, and much more. The platform also has open APIs that can connect to almost any system inside the ecommerce area.

Sitecore launches Experience Edge. Sitecore, a participant in electronic experience management software, has announced Sitecore Expertise Edge, a new SaaS-based platform for headless content delivery at scale to any customer touchpoint. In accordance with Sitecore, Experience Edge meets the needs of marketers and programmers by offering flexible choices to create digital experiences for shoppers. The first launch, accessible early 2021, will be headless content delivery, providing manufacturers the ability to publish content to whatever channel or device they want, from phones and watches to tablets and voice-controlled apparatus

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