Mastercard Inc. MA has partnered with QuadPay, a leading player in the BNPL (Buy Now Pay Later) market. BNPL is a payment solution that allows customers to choose a financing plan and pay in installments instead of paying the full cost in advance of their purchases.
As part of the deal, Mastercard Vyze, the leading alternative financing platform, will provide businesses and customers with a structured payment shopping experience, both online and in-store.
QuadPay and Vyze will provide consumers with easy access to a simple and transparent payment method in four payment options through a request form. QuadPay’s BNPL funding model is a commonly used vehicle for purchases between $ 35 and $ 1,500, and does not include any interest or stress on credit scores.
Mastercard’s partnership with QuadPay is strategic, given the latter’s leadership in the BNPL industry. BNPL is becoming a go-to option in the e-commerce landscape as businesses look for ways to entice customers into more expensive purchases to increase sales. This, in turn, also increases customer loyalty.
Last year, Mastercard acquired Vyze to operate the vast BNPL space, which is currently run by a host of non-bank fintech startups. Vyze is a digital commerce and payments matchmaker, bringing together lenders and merchants, helping them provide installment loans to consumers who purchase products from these merchants.
The BNPL payment mechanism is a huge buzz among millennials because this option allows them to make purchases that would normally be layaway targets. It is a more nuanced form of buying on credit.
It seems more attractive to those who do not have a credit card but have the ability to buy. This is a type of point-of-sale (POS) financing, which helps consumers buy anything that might otherwise not fit within their budget.
Point-of-sale financing represents a significant and growing opportunity in which consumers are spoiled for choice of payment. According to an Accenture figure cited by Mastercard, the industry reflects an opportunity worth $ 1.8 trillion. Thus, this space remains largely under-penetrated and unexplored.
The world of point-of-sale financing is booming. By Mastercard, the market grows at a rate of 20% per year.
Last year, another major player in the payments industry, Visa Inc. V, announced that it would partner with banks and merchant customers to pilot a structured payment solution from January 2022.
Another PayPal Holdings, Inc. entity PYPL recently announced its entry into the BNPL space by offering a payment product named “Pay in 4”, which will allow customers to pay for any item priced between $ 30 and $ 600, payable in four installments within six weeks.
Square Inc. SQ also offers Square Installment Payments which allows small business customers such as hairdressers, auto parts dealers, among others, to offer the flexibility of installment payments to their customers.
Since the start of the year, the stock has gained 22.6% compared to its industry’s growth of 10.7%.
Mastercard currently carries a Zacks # 3 (Hold) rank. You can see The full list of current Zacks # 1 Rank (Strong Buy) stocks here.
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