Mastercard Building Bank-Driven Buy Now Pay Later Platform

In a press release last week, Mastercard announced that it is building a bank-driven Buy Now Pay Later (BNPL) platform called “Mastercard Installments” that will allow borrowers to apply for loans through mobile banking and use a virtual card to pay the retailer in monthly, often interest-free payments.

“At the heart of it, payments come down to choice—and people want more from their money with greater flexibility and control in how they pay and where they shop,” said Craig Vosburg, Mastercard’s Chief Product Officer. “Mastercard Installments has been built on our guiding principles to protect consumers and enable choice without sacrificing trust and security. It is a digital-focused way to pay today and tomorrow, delivered through [the] consumer’s most trusted relationships with their banks and other lenders, at merchants of their choice.”

“Consumers are demonstrating a high level of interest in this buy now, pay later capability,” Vosburg said, according to CNBC. “It uses the power of the Mastercard network and franchise to bring this to market at scale.”

According to American Banker, Mastercard Installments is fueled by the company’s $825 million purchase of Finicity in 2020. By pre-qualifying borrowers for zero-interest installment loans, the platform will connect consumers to credit unions and banks.

Most BNPL loans are offered by the retailer either at the point of sale or during the online checkout, but Mastercard Installments can operate via the cardholder’s mobile banking app. The app gives borrowers a virtual card number for purchases with participating lenders, and consumers can then repay the loans through the card issuer’s debit card, or through checking or savings accounts.

“We see a high prevalence, in our program and others, [of] people choosing Mastercard debit as the means of repayment,” said Vosburg. “It’s consistent with our mission of providing choice to both consumers in terms of how they want to pay, and to merchants in terms of how they want to be paid.”

Mastercard Installments will first come to market in the United States, Australia, and the United Kingdom (UK).