Buy now, pay later (BNPL) plans represent 3 percent of global ecommerce, but high default rates and economic headwinds are impacting BNPL providers.
Recent examples include New Zealand brands Openpay and Laybuy, currently in receivership, and U.S. BNPL provider Affirm, which disclosed plans to lay off 19 percent of its workforce following an earnings dip in the fourth quarter of 2022.
Nandan Sheth, CEO at Splitit, has seen BNPL providers expand digital banking services and expects this trend to continue in 2023 among leading players in the space. "If a credit card portfolio has more than 60 points of write-offs, you'd call that a subprime portfolio," he said.
"BNPL is accelerated subprime, with no path to profitability, so these BNPL companies are going to offer banking services to the millions of consumers they've registered." New BNPL add-on services may include bill pay, financial solutions and other neobank product offerings, Sheth stated.
Visa decreed that beginning April 15, 2023, merchants cannot assess surcharges in excess of 3 percent on credit card payments. The news was coupled with a change in registration procedures for surcharging.
Now, instead of notifying Visa directly, merchants planning to surcharge will need to notify their acquirer at least 30 days before the start of surcharging.
"I think Visa takes this issue very seriously, and it has made its opinion clear," said James Shepherd, president of CCSalesPro. Not only does the new cap seriously impact residuals on surcharging accounts, but it could also affect other pricing models that shift processing costs to cardholders.
Any pricing model that adds a line-item charge—as is the case with many cash discount programs, for example—could be construed as surcharging.
Visa reportedly dispatched an army of secret shoppers to identify merchants that are adding surcharges to tickets in violation of its rules and is fining those merchants' acquirers.
The United Kingdom's Financial Conduct Authority (FCA) launched a formal investigation into buy now, pay later (BNPL) best practices to protect consumers' financial health and ensure that BNPL promotions are "clear, fair and not misleading," FCA representatives stated.
The FCA has been monitoring BNPL providers and confirmed it will continue to enforce its guidelines after penalizing 4,226 promotions in 2022.
Examples of non-compliant promotions include:
During an August 2022 roundtable discussion held to discuss upcoming regulations, the FCA urged financial service providers to do more to support borrowers in financial difficulty.
The U.S. Payments Forum developed a resource it says will simplify the PINless debit implementation process for retailers, networks and acquirers.
PINless debit is a debit card transaction that gets routed through regional ATM/POS networks without the need for PIN verification. While the capability has existed for nearly a generation, PINless debit took off during the pandemic for situations where PIN verification isn't practical, like ecommerce and contactless payments.
In a new white paper, the U.S. Payments Forum said its analysis suggests PINless debit is especially popular among retailers that handle smaller transaction amounts, as well as quick service restaurants.
Verticals like hospitality and petroleum, on the other hand, have been slow to adopt PINless debit due to their reliance on dual-messaging technology (preauthorization followed by transaction). Several card issuers have been slow to support PINless debit, leading regulators to force them off the collective dime. 
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