- Looking to streamline the buy now-pay later process for merchants, payment software firm ACI Worldwide is launching ACI PayAfter, a tool that acts as a gateway and integrates multiple BNPL options for consumers, according to a Tuesday news release.
- ACI PayAfter, available for both e-commerce and in-store point-of-sale, streamlines the checkout process and yields higher approval rates for consumers looking to go the BNPL route, said Debbie Guerra, ACI's head of merchant payments.
- Miami-based ACI currently works with about 70 BNPL providers globally, and expects to expand its portfolio to include hundreds by 2023, Guerra said. ACI PayAfter is expected to be up and running in May.
As paying in installments has ballooned in popularity, those in the payments space have been eager to jump on the BNPL bandwagon. In recent months, card companies, processors and credit bureaus have announced intentions to capitalize on the trend; BNPL spending is expected to reach $995 billion by 2026.
For its part, ACI has "seen an explosion in demand for various buy now-pay later solutions" in the last few years, Guerra said. ACI works with about 40,000 merchants globally including multinational companies such as IKEA and Adidas, and with intermediaries who white-label their payments platforms.
BNPL often generates higher sales volume, but Guerra said installment loan approval rates for interested consumers range from 50% to 60%, resulting in abandoned carts for those who are declined.
Merchants want to "easily offer choice in lenders that will optimize credit approval rates for creditworthy consumers," who might be underbanked, unbanked or lack traditional credit history, Guerra said, and consumers want a simple process with fewer applications.
ACI PayAfter has consumers seeking the BNPL option fill out a single application. From there, the transaction goes to the first BNPL provider in the funnel; if that lender declines, the transaction goes to the next BNPL lender in the line-up, with multiple options boosting the chance for approval.
Merchants can decide how many BNPL providers they make visible – in most cases, they’ll likely opt for three or four, Guerra said – and the sequencing of those lenders as a consumer moves through the process.
Part of the equation is "getting the right lenders in the mix for approved conversion rates," she said, as merchants look to push approval rates to 85% or above.
ACI Worldwide works with Sweden's Klarna, San Jose, California-based PayPal, San Francisco-based Affirm, Australia's Afterpay, "and many others that are up and coming," Guerra said. The gateway offers increased access for BNPL companies, and the larger players "still have the ability to influence merchant decisions on where they’re positioned in the credit approval process."
The program will be available to merchants who use ACI’s Secure eCommerce and Omni-Commerce platforms. Some merchants may market it with their own name, rather than ACI’s, "because many of them are going to want to reinforce the fact that they’re providing that choice," Guerra said.
As paying in installments has exploded in popularity, it’s also attracted regulator attention. The Consumer Financial Protection Bureau, concerned about the debt BNPL users are assuming, has ordered Affirm, AfterPay, Klarna, PayPal and Zip to provide information on the risks and benefits of installment loans. The agency gave the companies a March 1 deadline to comply.