BNPL: revised credit score plan advantages entrepreneurs
BNPL, which in free translation means buy now and pay later, has updated characteristics of an old acquaintance of the national retail
Presented as a novelty for the Brazilian market, the BNPL (“Buy Now Pay Later”, in the acronym in English), which in free translation means buy now and pay later, has updated features of an old acquaintance of national retail: the credit card. This, however, does not prevent the form of payment from being able to help companies, especially MEIs and MSEsto win customers.
Today, BNPL does not have specific regulation by the Central Bank. The federal autarchy states that it monitors “the development of private solutions, but still does not produce statistics or projections on the subject”. The product is still in its infancy, even though it demonstrates growth in the domestic scenario.
It is a granting of credit. At the time of purchase, in an ideal world, the customer could choose the payment method and, in real time or in a short period, risk and fraud analyzes would be performed so that a limit would be available for any acquisition. Outside of this ideal world, the review can take longer, like a few business days.
The director of the e-commerce platform Nuvemshop Renato Burin explains that, as this assessment is about a customer that the company does not know, the tendency is for this first contact to be for a lower limit. “It is a very new concept in Brazil. These companies are starting to operate and understanding consumers’ credit risk. There is not yet a very strong appetite for credit, so it is not possible to give high limits to a consumer you don’t know much about”, he says.
So far, there are two major strengths of BNPL for retail. On demand, the online credit card form can make life easier for those who do not have a credit card or have no limit on their account, as the analysis is carried out in a short time and, for a specific purchase, at the so-called check-out.
On the supply side, BNPL’s proposal is not predatory, as it does not replace credit card sales. It ends up being a complement, which, at the end of the day, can help close a sale that the consumer might have had difficulty paying with other forms of payment. “This is something new, which does not interfere with other installments. Those who have limits with banks or fintechs continue to prefer to pay with a credit card”, says Gastão Mattos, CEO of Gmattos Consultoria.
Igor Silva de Azevedo, owner of an e-commerce for articles related to the K-Pop genre, has been using BNPL for about two years and has been noticing the same trend. He says that the measure helped to gain more sales opportunities. “On Black Friday, we had many operations in this modality, because, as the date occurs at the end of the month, many people already had no limit on their credit card. It ended up being a complement to our sales”, he evaluates. According to him, the installment is made with an entry, in cash, plus three installments.
Azevedo’s store operates on the Nuvemshop network and uses a financial institution as an intermediary for payments. Within the platform, at the so-called check-out, where the customer will complete the operation, the BNPL concept is applied under the name of Pix in installments.
According to Gastão Mattos, the strategy is common since the appeal of the “Pix” brand is strong among Brazilian consumers. “At the end of the day it is a BNPL.” Mattos’ company carried out a study on the subject, which concluded that, as BNPL does not compete directly with credit cards, there is good growth potential for the sector.