Frank Tian’s Post

#BNPL = #CreditCards - According to a ruling today by the Consumer Financial Protection Bureau BNPL providers will not have to treat the transactions the same way as credit cards - Well sort of? Let's talk about it 💳 The ruling requires them to adhere to dispute and chargeback rules in line with credit card rules 💳 There was mention of adherence to the Truth in Lending Act as well So What 💳 The BNPL providers had existing dispute processes so it is unclear how much different this will be for most providers 💳 The question about Truth in lending is more interesting because that would open a whole new set of potential disclosures which could be a cumbersome change 💳 On the bright side, for the providers, this could be worse. If the CFPB had required adherence to debit card rules, that would open up questions about provision credits and other requirements that apply only to #debitcards Bottom Line I don't foresee this being a major disruption or cost for most providers and will not impact volumes for them in a material way. If anything, this may make consumers more comfortable with using the service. BNPL will continue to be a significant disruptor to traditional credit cards. What do you think? Does this change the landscape at all? Brandi Gregory Glenn Grossman Jessica Pinkston Kevin Von Holten Sam Kilmer Mary Wisniewski Lindsay Hooks

The CFPB recently issued an interpretive rule stating that lenders who offer BNPL meet the criteria for being credit card issuers and must follow the same regulations. In our latest blog, Jennifer Bennett, Strategic Product Manager, discusses this ruling and how it gives credit unions that offer post-purchase solutions a competitive edge over point-of-sale BNPL merchants. ➡️ Read the blog: https://bit.ly/4eZwi8W #CreditUnions #BNPL #payments

With Buy Now, Pay Later (BNPL) gaining immense popularity, the recent ruling by the CFPB is a significant win for consumers. BNPL lenders are now classified as credit card providers, ensuring key protections such as the right to dispute charges, request refunds, and receive billing statements. This marks a positive stride towards a fairer BNPL market. According to recent data, approximately 57% of BNPL users fall within the 18-35 age bracket, many of whom are new to credit. It would be beneficial if BNPL lenders reported to credit bureaus, aiding young consumers in building credit history and providing lenders with a more comprehensive view for future credit evaluations. Read more about the CFPB ruling at CNBC: https://lnkd.in/eyKjiUbK #BNPL #ConsumerFinance #CreditBuilding #Fintech

New CFPB Rule Extends Credit Card Protections to Buy Now, Pay Later Loans The Consumer Financial Protection Bureau (CFPB) has issued a new rule ensuring that “buy now, pay later” (BNPL) loans will soon offer the same protections as credit card users. This revised guidance mandates that BNPL providers, such as Affirm and Klarna, must issue prompt refunds on returns, provide comprehensive billing statements, and allow repayment pauses amid charge disputes. While major BNPL lenders largely support the ruling, they emphasize that BNPL plans and credit cards are distinct products that require different protections. This change, set to take effect in two months under the Truth in Lending Act, will not alter how BNPL companies report to credit bureaus. #ConsumerProtection #BNPL #CFPB #Finance #Affirm #Klarna #FinancialRegulation

Buy-now-pay-later (BNPL) continues to be a growing channel for consumers to make purchases. As more consumers buy goods using BNPL, BNPL will likely get more scrutiny from regulators. This will affect both which consumers are able to use BNPL, and the business of collections when these loans aren't paid timely. #Collections #BNPL #Customerexperience https://lnkd.in/gTUn9izq

The Consumer Financial Protection Bureau (CFPB) today (May 22) issued an interpretive rule that confirms that Buy Now Pay Later (BNPL) lenders are credit card providers! BNPL lenders such as Klarna, Afterpay and Affirm should be treated in some ways like credit card providers, according to one US financial regulator - CFPB. Like credit card providers, BNPL firms must investigate disputes, refund returned products or voided services, and provide billing statements. Latest interpretation brings Buy Now, Pay Later (BNPL) companies closer to the regulatory framework of credit card providers, although BNPL firms are not required to assess consumers' ability to repay short-term installment loans. For some time, BNPL providers have anticipated greater regulation. The global BNPL market is projected to grow from $37.19 billion in 2024 to $167.58 billion by 2032, as per the recent report. This move marks a significant step in integrating BNPL firms into the existing regulatory landscape, ensuring fair competition and consumer protection. #creditcards #BNPL #ConsumerProtection #Credit #Klarna #Regulations #Fintech

In case you missed it, U.S. consumers have entered you into a race. Did you know that: 🤺 70% of BNPL users would prefer the service from their financial institution (Source: PYMNTS) 🤺 71% of BNPL users would be interested in other financial services through their BNPL provider (Source: Marqeta) Consumers want purchase, payment, and banking capabilities from ONE place. So the question is, who will win the consumer wallet and the financial relationship? Will it be #BNPL providers who expands their offerings? Or will it be financial institutions that unlocks BNPL for its account holders? We know who we're rooting for. (Hint: It's you!) #buynowpaylater #affirm #creditunions #creditunion #payments #banking

It's not frosting. It's part of the cake. 🍰 If you think of Buy Now, Pay Later as a vanity investment, it's time to look at your data and think again. Here’s what we know from launching BNPL with dozens of financial institutions: ⚡Your cardholders are using 3rd-party #BNPL: 3 out of 5 consumers have used BNPL in the last year, and 79% are highly satisfied 💯 They're paying for BNPL with their debit cards: 89% of 3rd-party BNPL repayments are made on the debit card 🔆 They're getting offers for BNPL debit cards: Over 700K consumers today have an #Affirm debit card. Banks such as #Chase have also introduced BNPL for their debit cards. How does BNPL look for your FI? Let's find out: https://lnkd.in/ePC7f6Zx #Buynowpaylater #creditunion #digitalbanking #payments Jessica Hernandez Generations Federal Credit Union PYMNTS

For those unfamiliar with the term, Buy Now, Pay Later (BNPL) is a payment method that allows you to make purchases and pay for them in installments over time. While this option may seem convenient, it's crucial to approach it with caution and understand the potential risks involved, especially since it is growing in popularity and has, until recently, been under the regulatory radar. The Consumer Financial Protection Bureau (CFPB) has recently classified BNPL lenders as credit card providers, granting consumers legal protections similar to traditional credit cards. However, it's essential to approach this service with caution: ⚠️ Debt Trap: The ease of splitting payments can lead to overspending and accumulating debt faster than anticipated. ⚠️ Hidden Fees: Some BNPL services may charge late fees or deferred interest, adding unexpected costs. ⚠️ Credit Impact: While marketed as a separate service, BNPL loans can still impact your credit score if mismanaged. Although the CFPB's ruling ensures rights like dispute resolution and refund processing, this industry continues to grow, and new challenges are rising continuously. #ConsumerProtection #BuyNowPayLater #FinancialRights #CFPB #ConsumerRights

The Consumer Financial Protection Bureau recently stipulated that BNPL providers are credit cards, enabling consumers to dispute charges and claim refunds directly to the BNPL provider. This is going to have serious ramifications for the infinite number of embedded BNPL providers. I don’t have statistics on disputes and refunds for BNPL vs. credit card, but credit cards are around 0.50%. BNPL providers will need to build out teams to manage disputes and refunds, which will further impact the margin profile of these companies. Lending is already a challenging game and this will further impact unit economics. 🤔