Barclays US Consumer Bank will offer its merchant partners the ability to provide point-of-sale (POS) financing installment options later this year, making the London bank’s North American arm the latest financial institution to get in on the buy-now-pay-later (BNPL) trend.
"Customers want buy-now-pay-later products. Our partners want those, as well. We view this very much as an extension of our business model," said Denny Nealon, CEO of Barclays US.
Barclays US is launching the service in partnership with technology provider Amount, which helps financial institutions build POS financing interfaces into their legacy systems.
"We bring a lot to the table in terms of stability, relationships, credit underwriting and servicing, and in Amount, we found a partner who can really help accelerate our path forward to their technology platform," Nealon said.
The bank had BNPL services on its product roadmap for some time and had originally planned to develop the product in house, Nealon said.
"We looked at what we're really good at and what it would cost for us to be able to do this and do it well," he said. "And then getting to know the team at Amount, it was a pretty easy decision."
Amount, which spun out from online lender Avant in January 2020, has four banks using or slated to use its BNPL product, CEO Adam Hughes said.
TD Bank, another Amount partner, uses the fintech’s services to offer shoppers an installment payment option when they make online purchases of products by NordicTrack, a merchant partner of the bank.
Through the partnership with Amount, Barclays said its merchant partners will be able to offer customers a POS payment under the merchant’s own brand.
"Our whole model is based on helping merchants be successful. We feel like by bringing that expertise, with our balance sheet, our cost capital advantages and our servicing model, coupled with ... this world-class platform that Amount has created, it gives us a huge first-mover strategic advantage that I think others haven't done yet," Nealon said. "We plan to use this to supercharge our growth and give our partners and our customers more options to buy stuff with."
Barclays and Amount declined to share financial details of the partnership, but the majority of Amount’s revenue will come from transactions, as it takes a percentage of any loans Barclays processes through its services, Hughes said.
"As we scale this partnership together, Barclays is going to be really pleased that they're originating new assets, the merchants can be very pleased that they've unlocked this additional payment option, the customer has the choice, and then we've unlocked some additional revenue opportunity for our business," he said. "I'm excited to see banks, especially Barclays, really starting to lean into this category to offer these products that are clearly resonating with consumers."
Consumer adoption of BNPL has taken off amid the pandemic, with payment volumes growing by more than 50% among the space's top four firms through the first nine months of 2020, according to The Wall Street Journal, which cited data from Autonomous Research.
The BNPL trend is expected to grow. Consumers will spend an estimated $680 billion globally using POS installment payments over e-commerce channels by 2025, fintech research firm Kaleido Intelligence found in September.
