How open banking can improve the BNPL experience

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According to research from Barclays and StepChange, BNPL credit could prevent as many as 876,000 Brits from getting into uncontrollable debt in this year alone. If UK retailers demanded their lending partners adopt more responsible practices, like performing full credit checks or even partnering with regulated finance providers, people who couldn't afford to make such large purchases wouldn't be allowed to use BNPL in the first place, thus helping them avoid unmanageable debt. With 36% of consumers finding BNPL lending attractive, partly due to rising inflation and energy costs, consumers in the UK are now paying off an average of 4.8 purchases, up from 2.6 in February 2022. ment options, without all of the complexities traditional lending entails. And it's no surprise. BNPL actually offers both merchants and consumers a very useful service. During the pandemic, some shoppers could only afford to pay for necessary goods due to BNPL's ability to split payments into smaller installments. In a period where many were suddenly jobless or working less hours, BNPL provided some much-needed relief. Now, BNPL is starting to appeal to more businesses, but for a different reason. Some are still facing cash flow issues caused by a combination of factors, including worsening economic conditions and supply chain issues. In this day and age, being able to receive money faster and through more flexible means is incredibly appealing to businesses. In our previous article on BNPL, we talked about why the payment method is under scrutiny for the possible unethical spending habits it encourages. Despite the fact that 62% of BNPL users believe it will eventually replace their credit card, growing concerns are causing increased government involvement. The question is how to get the most out of what BNPL has to offer while improving customer protection and transparency. So where does that leave us today? We must determine how to handle the ethics surrounding BNPL balancing on the fine line between ensuring customers don't become overburdened with debt while making sure they still have access to a flexible payment option. How do we go about doing that? The answer might lie in open banking. ith promises of greater payment flexibility, "Buy now, pay later" (BNPL) remains an in- demand payment option, with usage only on the rise. Providers are popping up around the world, claiming to offer the greater convenience and comfort that come with delayed pay- hile BNPL is often criticized for leading its users into unmanageable debt, BNPL can also provide its users some much-needed financial breathing room when used correctly.

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