How to Avoid Brand Dilution But Still Offer BNPL

We live in the age of embedded finance, where non-financial organizations are seamlessly integrating financial services into their customer journey. In fact, most major retailers have added a third-party financing service to their checkouts — like Klarna or Afterpay — to offer split payments, point-of-sale (POS) installment loans, and lines of credit.

But there are other buy now, pay later (BNPL) solutions out there in addition to the direct-to-consumer (D-to-C) fintechs. With a white-label BNPL platform, you can also give customers flexible ways to pay and decrease cart abandonment rates while simultaneously building your brand and increasing customer loyalty.

Today, merchants don’t only want to sell their products; they want to be perceived as enhancing their customers’ quality of life, too. Therefore, embedded finance isn’t only about convenience. It’s also about cultivating a positive experience and outcome.

Here’s how you can avoid brand dilution and still offer beneficial BNPL solutions.

Trust White-Label BNPL Offerings

Many merchants and brands have learned that if a customer has a negative experience with a third-party service embedded in their customer journey, consumers associate it with the retail brand as well. Therefore, there’s a shift towards brands wanting to control their own end-user experience as they have a specific value system to uphold. This is where white-label BNPL comes in.

It’s All a Matter of Control

With a white-label offering, merchants and brands have more control over what financial products are provided to which customers. Take SKU-based financing, whereby merchants can choose BNPL offerings for each product. For example, a merchant could offer split payments for one product and a line of credit option for another product.

Brands can even follow users’ financial journeys and choose certain add-ons. If a customer’s cart value is above a certain amount, perhaps a retailer, alongside a lender, will decide that split payments shouldn’t be an option for the customer and would prefer to offer a line of credit — something that's only available through a white-labeled solution.

Sophisticated players in the BNPL space want to go further and tailor financial solutions per transaction, too.

When a brand assists customers in managing their payments, cash flow and budget within a branded, personalized framework, it increases their value.

With a D-to-C BNPL provider, merchants cannot govern data ownership and need to share their customers’ information with the vendor. With a white-label offering, however, there's no middleman, meaning merchants can retain data exclusively and avoid sending it to a third-party vendor. This way, merchants can better understand their customers and their spending habits and design better marketing strategies.

For example, Ikea Ireland offers it own split payment service, where customers can apply to split their purchase price into three installments without involving a vendor or lender.

It Simplifies Online Checkout

Large D-to-C BNPL providers acquire customers at merchants’ POS by offering payment options at checkout. Once a customer creates an account with the D-to-C provider, they become the D-to-C’s customer and start receiving push offers and emails, even from direct competitors to the retailer they originally came from.

This encourages the customer to shop through the fintech BNPL's branded online marketplace or shopping app — perhaps instead of returning to the initial retailer.

To optimize the checkout and customer experience, retailers must put in consistent effort to ensure it remains as seamless and frictionless as possible. With white-label BNPL, the customer remains within the retailer’s user journey, with zero distractions and diversions — completely embedded finance.

It Means Responsible Lending

A retailer that offers white-labeled BNPL from a regulated entity is more likely to be perceived by consumers as a brand with their best interests at heart.

More and more merchants and retailers are absolutely adamant that they don’t want their customers to overspend and don’t leverage financial products that allow for untethered, irresponsible debt. They want to know which products are offered to which customers and want to make sure that customers can afford to make repayments without overextending themselves.

Also, in light of recent regulation updates, merchants are increasingly turning to BNPL offered by banks. This way, merchants can offer regulated, responsible financing to all their customers.

Provide Online and In-Store BNPL

Reports show that nearly every consumer who has used BNPL is interested in taking advantage of it again. Therefore, if you have a BNPL offering online, make sure to offer the same flexible payment options offline in brick-and-mortar stores, too. Customers expect consistency and the same payment services across all different channels.

Everything offered in-store also seems to be a more direct representation of a retail brand as it’s more of a tactile experience. Offering both online and in-store BNPL allows retail brands to avoid dilution, stand out from the competition, and develop stronger customer relationships.

Final Thought

Unlike lenders, banks and fintechs, a merchant’s motivation is not to give a loan but to increase sales and build trust — a different outlook to those entities whose mandate is to lend. White-labeled BNPL helps retailers build their brands and convert more customers while increasing consumer purchasing power.

Yaacov Martin is co-founder and CEO of Jifiti, a technology company that powers point-of-sale financing for banks, lenders, and merchants with its white-labeled BNPL platform and end-to-end solution.