Published: February 1, 2022
Reading time: 5 minute read
Written by: Forter Team

Informed decisions are better decisions.

To help you make better decisions, Forter asked a BNPL expert to explain BNPL solutions and how to mitigate any risks. Yaacov Martin, CEO and Co-Founder of Jifiti, shared his in-depth industry knowledge with us, explaining the different BNPL solutions available today and answering questions, like: Which BNPL providers are out there? What are the risks of BNPL, and how can you make the best choice of BNPL solution for your business?


Buy Now Pay Later is expected to reach $1 trillion in annual gross transaction value by 2025.

Demonstrated to increase Average Order Value by up to 70% and sales by up to 40%, BNPL is growing in popularity with online and in-store retailers around the world. Amazon has already jumped on board, as have other top global retailers, like IKEA and BJ’s Wholesale Club.

While BNPL has been making headlines, few articles differentiate between the different types of BNPL providers. For example: 

  • Some providers offer regulated BNPL options and some don’t.
  • Some providers develop consumer-facing BNPL products while others offer solutions that work behind-the-scenes.

Before making a decision regarding BNPL, it’s important to understand the different options and their implications for your business and your customers. 


What are BNPL solutions?

Before we dive in, let’s start with a definition of BNPL. You’ll find many terms floating around for Buy Now Pay Later: 

  • Split payments 
  • Point-of-sale financing 
  • Pay-in-4 
  • Pay-in-3

These are just some of the terms used to describe consumer financing at the point of sale.

They all essentially boil down to the same concept – giving consumers the ability to split their payments at the point of purchase; to buy now and pay later. However, there are technical (and significant) differences in financing products and providers.

As a retailer, you need to make the right choice of BNPL solution and provider, in order to enhance your brand and customer loyalty.

Don’t put all BNPL providers in the same basket

When choosing a BNPL provider, you need to compare apples with apples. Not every provider follows the same business model or offers the same BNPL options. While there are a number of different types of providers, they can essentially be classified into two main categories:

1. Direct-to-consumer providers

When referring to BNPL, the direct-to-consumer (D2C) providers typically come to mind. The Klarnas and Affirms of the world enable retailers to offer BNPL to consumers through their marketplaces. Even within this category, no two providers are exactly the same. Some offer installment loans, while others provide split payments. Some already work within a regulated framework, while others do not. But what defines them is the fact that they are a consumer brand. Even when on the retailer’s site, the consumer pays using a D2C provider. The result: the customer becomes the D2C BNPL company’s user.

2. White-labeled facilitators

There is another breed of Buy Now Pay Later providers and they facilitate bank-grade white-labeled BNPL programs. This type of solution is making deep inroads into the industry, particularly with upcoming BNPL regulation, which we explain further below. These companies enable retailers to offer their own branded BNPL, which is embedded directly into their own customer journey. Unlike the D2C providers, white-labeled facilitators remain fully behind the scenes, powering the BNPL program from the back-end.

These BNPL platforms connect banks and lenders to merchants and provide the technology needed to deploy BNPL at any point of sale.

Tier-1 banks and lenders provide merchants with the loan programs, white-labeled under the retailer’s own brand. The merchant takes on no risk, and can work with leading banks, including banks with which they already have a working relationship.


The hidden perils of BNPL

What are the risks of BNPL, and how can you make sure you mitigate those risks? These are the main risk factors to consider:

1. BNPL regulation

The increasing regulatory interest in BNPL, especially by the Consumer Financial Protection Bureau (CFPB), does not apply to all BNPL providers.

Because white-labeled facilitators partner with regulated financial institutions, such as banks, for the financing, they will likely not be impacted by upcoming regulatory pushback. They will be well-positioned once the market inevitably becomes regulated because their BNPL programs already operate within a regulatory framework.   

2. Data ownership

One of the drawbacks of joining a direct-to-consumer BNPL program is sacrificing your data to the third-party BNPL provider. 

When you roll out your own white-labeled BNPL solution, you retain full data ownership, which you can use to better understand your customers’ behavior and needs, and make data-driven decisions.

3. Customer relationship

Since most consumers have an eight-second attention span, the fewer distractions in the customer journey, the better.

One of the risks of offering BNPL through a fintech’s marketplace is customer journey detours. Customers are inundated with offers from other brands alongside your own, so you would have to compete with other retailers for consumer attention.

With white-labeling, the financing is directly embedded into your own customer journey, with no third-party distractions.

4. Brand dilution

When the BNPL offer is not in your brand, you risk brand dilution at checkout. When you offer your own brand of BNPL, you benefit from strengthening your own brand instead of someone else’s.

Bottom Line: Protect your checkout real estate

Checkout is not just a transactional destination — it’s one of the most valuable pieces of real estate for online retailers, one worth protectingIt’s the place where decisions are made, data is captured, and customers are won or lost. White-labeled BNPL helps you protect your data and customer ownership and build your brand, because it’s only you and the customer at checkout.

Read the Jifiti BNPL whitepaper for more details about what to consider when choosing your BNPL solution.


About the author
Yaacov Martin is CEO and Co-Founder of Jifiti, a fintech company that he co-founded in 2012. He is a Buy Now Pay Later (BNPL) thought-leader and an active contributor to leading payments and fintech publications. 


Yaacov Martin – Jifiti CEO and Co-Founder
5 minute read