The buy now, pay later (BNPL) wave first formed around relatively inexpensive fashion and beauty goods, but industry watchers keep looking for new use cases that will expand and unlock bigger-ticket potential, in many cases for consumers with impaired credit.
Among areas where consumers would like access to installment payment options, medical and dental costs as well as home remodeling loom large, though there aren’t many BNPL options in those spaces yet. That’s a gap Wisetack is bridging with simplified consumer financing for goods and services where BNPL coverage is mostly absent today, from durable goods to cars to dental work.
As Wisetack CEO and Co-founder Bobby Tzekin recently told Karen Webster, “We’re at the intersection of two big trends,” one being “the realization by consumers that today there are better options for how they can borrow,” the other being “the adoption of buy now, pay later in eCommerce over the last five, six, seven years [showing] how big the need is by consumers.”
Like all alterative credit providers, Wisetack is competing against $4 trillion in annual credit card spend — still very popular among those with unsecured credit. However, $1 trillion of card debt is revolved each year, he said. “Folks understand that that’s a really expensive way to borrow. When there’s a better option to pay for a purchase, people will opt for that.”
Tzekin acknowledged that the company specializes in a handful of verticals at present, skewing to the home trades, where prices are often hefty.
“We focus on emergency repairs and things that are still in that range from a few thousand up to $10,000 to $20,000, which usually folks will want to take care of in a faster way than getting a home-equity line of credit,” he said.
Big-ticket BNPL is happy news to consumers with poor credit or no credit — or to those who just want to manage their spending.
According to The Second-Chance Consumer: How Buy Now, Pay Later Payments Create New Merchant Opportunities, a PYMNTS and Sezzle collaboration, “A large share of second-chance survey respondents who have chosen to use BNPL as a checkout option online said it allowed them to spread their payments over time (55%) and helped them manage their monthly expenses (43%).”
Get the study: The Second-Chance Consumer: How Buy Now, Pay Later Payments Create New Merchant Opportunities
BNPL’s Online/Offline Opportunity
Consumer experience is the elusive metric by which companies are now measured, and payments are one of the best ways to deliver a positive experience — while making a profit.
This is another differentiator for Wisetack: it works online or offline, customer depending.
“The adoption of buy now, pay later has been substantially slower or nonexistent offline for purchases that are not made on a website by checking out with a shopping cart,” Tzekin said.
Describing the many manual steps offline BNPL involves — home visits for estimates, dealing with representatives — he said, “We’ve built something that works really easily and seamlessly for both the businesses and the consumers for those offline purchases. It’s a complicated process that we make really simple and easy.”
He added, “Whether the consumer’s interacting with a technician in the field or with an admin on the phone, those employees of the business usually can push a button and send a text message to the consumer with information about their financing options with Wisetack.”
As an online solution that leans heavily on application programming interfaces (APIs), Wisetack is embedded into platforms “just the way card processing is integrated to a software platform,” Tzekin told Webster.
“It allows a software platform to offer a much better product to their customers, which are businesses. Part of our differentiation is that we’ve made buy now, pay later financing work seamlessly and easily for businesses the way we’ve become used to card processing working.”
Businesses pay a merchant processing fee comparable to card processing to use Wisetack, but Tzekin said they do not charge origination fees, prepayment fees or late fees.
See also: FinTech Wisetack Nets $45M to Expand its BNPL In-Person Services Solution to More Verticals
Risk and Reward
All BNPL providers are adjusting credit underwriting models as the financing concept expands.
“We check the identity of the person who’s on the other side: ‘Are they who they say they are?’ Then, we check their ability and willingness to pay based on things like their credit report. We use thousands of data points,” Tzekin said. “I’m very excited at how seamless and fast it is for the customer. They don’t have to spend a lot of time providing information. It is quick and easy, and we’re able to make sizable loans very quickly, which makes it convenient for our customers.”
Wisetack has integrated into a variety of platforms, which he said is “a scalable way for us to reach a lot of folks. However, people can use us either with or without an integration.”
A veteran of PayPal and LendingClub, Tzekin said he first encountered (and was involved in solving) many of the underwriting scenarios that Wisetack deals with today. That experience in consumer and B2B credit is proving invaluable for this atypical BNPL service.
“What’s happening in lending, in a way, we’ve seen this movie already in card payments,” he said. “That’s why we’ve been well-positioned to build a technology that takes what we’ve seen across both lending and card processing and build a technology that’s at the intersection of both. We are making loans, but it’s for purchase. It’s a method of the payment, and that very much informs everything we’ve built.”
