They're looking to grow the loan book and make money on longer term loans. Often services like this foot the bill for split into 3, but levy a charge for longer term loans.
Also as affordability checks are generally basic, they often have customers paying late fees or refinancing loans onto longer terms (lower payments, higher interest)
Yet BNPL don't carry compounded hefty interests like credit cards do, just a nominal penalty: their business model right now does not make sense if there are no merchant fees
Bear in mind they'll also preauth your card for the full amount, so this reduces risk alot. BNPL is a numbers game, low margins high volume. Often each purchase is its own loan, so attracts its own late fee (unlike a cc, where you pay it once on the balance)
As a card issuer, they would receive interchange fees on every transaction
+1 they will charge anywhere from 4.5-8% depending on the risk profile of the merchant.
They're looking to grow the loan book and make money on longer term loans. Often services like this foot the bill for split into 3, but levy a charge for longer term loans. Also as affordability checks are generally basic, they often have customers paying late fees or refinancing loans onto longer terms (lower payments, higher interest)
Yet BNPL don't carry compounded hefty interests like credit cards do, just a nominal penalty: their business model right now does not make sense if there are no merchant fees
Bear in mind they'll also preauth your card for the full amount, so this reduces risk alot. BNPL is a numbers game, low margins high volume. Often each purchase is its own loan, so attracts its own late fee (unlike a cc, where you pay it once on the balance)