BNPL Growth Driven by Value to Merchants and Consumers, But Fraudsters Taking Advantage

BNPL Growth Driven by Value to Merchants and Consumers, But Fraudsters Taking Advantage

April 14, 2022

Noting the value it brings to both consumers and merchants, financial analytics firm Moody’s offered a positive outlook for the Buy Now, Pay Later sector, predicting continued strong growth in the online payment method. The report highlighted BNPL’s growth through the pandemic driven by surging e-commerce but said the incremental sales opportunities it offers merchants and the additional purchasing power it gives consumers should ensure its popularity continues to grow.

Moody’s did say that one constraint on future growth could be a “relatively high” loss rate. While some of that loss will be pinned on consumers who fail to pay, some will be the result of fraud attacking a relatively new and growing payment method (a familiar story in the fraud prevention world).

A recent report from data aggregator and credit bureau Experian predicted that 2022 would see a sharp rise in fraud targeting BNPL transactions, especially identity theft and synthetic identity fraud. Card Not Present also reported last year on a different kind of attack targeting merchants that were early adopters of BNPL.

As the Moody’s analysis notes, however, merchants experiencing these fraud issues still see great value in accepting BNPL as a payment method. They see a new generation of customers coming to their websites for the first time because they accept these payment methods, and often the AOV on their purchases are higher. Despite fraud that may have bypassed their systems, many merchants are still seeing positive ROI from BNPL.

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