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Mastercard Expands in BNPL Market With QuadPay Partnership

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Mastercard Inc. (MA - Free Report) has partnered with QuadPay, a leading player in Buy Now Pay Later (BNPL) market. BNPL is a payment solution, enabling customers to choose a financing plan and pay in installments instead of paying the entire cost upfront for their purchases.

Per the deal, the company’s Mastercard Vyze, the leading alternative financing platform, will provide an instalment-based payment shopping experience, both online and in-store, for businesses and customers.

QuadPay and Vyze will provide consumers with easy access to a simple and transparent payment mode in four installment options through an application form. QuadPay’s BNPL financing model is a commonly used medium for purchases between $35 and $1,500, and includes no interest and no stress on credit scores.

Mastercard’s partnership with QuadPay is a strategic fit, given the latter’s leadership in the BNPL industry. BNPL becomes a must-have option on the e-commerce landscape as businesses look for ways to lure customers into pricier purchases to boost their sales. This, in turn, also increases customers’ loyalty.

Last year, Mastercard acquired Vyze to tap the vast BNPL space, which is currently being driven by a host of non-bank fintech startups. Vyze is a digital commerce and payments matchmaker, bringing together lenders and merchants, aiding them to offer installment loans to consumers who are buying those merchants’ products.

BNPL payment mechanism is a huge craze among the millennials as this option allows them to make purchases that would ordinarily be layaway targets.  It is a more nuanced form of credit purchases.

It seems more attractive for those who don’t carry a credit card but have purchasing capacity. It is a type of point-of-sale (POS) financing, which helps consumers buy all the stuff that otherwise doesn’t fit into their budget.
POS financing represents a large and growing opportunity wherein consumers are spoilt for payment choices. According to an Accenture figure cited by Mastercard, the industry reflects a $1.8-trillion worth opportunity. Thus, this space remains largely underpenetrated and unexplored.

The world of POS financing is expanding. Per Mastercard, the market is growing at 20% rate annually.

Last year, another major player in the payments industry, Visa Inc. (V - Free Report) , announced that it will partner with banks and merchant clients to pilot an installment payment solution starting January 2022.

Another entity PayPal Holdings, Inc. (PYPL - Free Report) recently announced its entry into the BNPL space by offering  a payment product named “Pay in 4”,  which will let customers pay for any item that comes in at a price between $30 and $600, to be paid in four installments within six weeks.

Square Inc. (SQ - Free Report) also offers Square Installments that enables small business clients such as hairdressers, car parts sellers among others to offer the flexibility of payment in installments to their customers.

Year to date, the stock has gained 22.6% compared with its industry’s growth of 10.7%.

Mastercard carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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