Banknotes,clock and sticky note with the word Buy Now Pay Later.

Why banks should consider a white-label response to the BNPL threat

The following is a guest post by Yaacov Martin, Co-Founder and CEO of Jifiti.

Competition in the Buy Now, Pay Later (BNPL) industry is rife, and the large fintechs that dominate the market are changing their offerings and services to stay ahead.

Affirm is making it easier for merchants to integrate its product, while Klarna announced it would share data about who pays off their BNPL loans with credit bureaus in the UK.

This is all in response to the growing number of BNPL fintechs (the market size is expected to reach $82 billion this year in the U.S. alone) and the regulatory bodies looking to keep tabs on the sector, like the Consumer Financial Protection Bureau’s inquiry.

With regulation particularly taking center stage, there’s an opportunity for banks – synonymous with trust for centuries – to take the place of some large BNPL providers and lead the space. By utilizing third-party white-label solutions, the regulated entities are ‘leveraging’ their regulated loan engine and simply using fintech tools to scale it.


Around 70% of BNPL users would prefer to use BNPL from banks because trust is vital when choosing a lender. Now, banks must be prepared for the demand and overcome threats from fintech leaders.

How can banks be market-ready? White-label services from third-party providers are becoming more and more popular.

When looking for a white-label platform, banks need to make sure the solution supports a variety of loan products to boost approval rates and scale rapidly. They should be able to begin to offer multi-product white-label solutions to a variety of customers, such as split payments in addition to point-of-sale (POS) installment loans and lines of credit.

This would help banks improve their overall consumer financing approval rates since split payments appeal to super-prime customers, leading to balanced application pools. As a result, this benefits the subprime market as the banks can offer them better access to financial products and approve more subprimes.

Here’s how traditional financial institutions can benefit from a white-labeled BNPL solution.

Extending financial services benefits banks’ brands

Over half of the users turning to BNPL services from fintechs are Gen Z and millennials. These generations often don’t have a rich credit history or credit report and may not be eligible for traditional credit. Moreover, these customers are also choosing not to get conventional credit cards.

However, suppose banks use white-label BNPL services offered by third parties. In that case, they can expand their portfolio of financial services, extend their reach to new customer segments, boost brand-building, and build customer loyalty.

As a white-label BNPL facilitator remains behind the scenes and simply builds on existing bank infrastructure, banks can create new branded services and cross-sell other banking products to their users. As they are synonymous with trust and reliability, they can add value to existing customers and acquire new consumers and merchants to drive more consumer financing revenues their way.

Time to market is quick

One of the main pain points for banks is that if they build their own BNPL offering from scratch, it is time-consuming, costly, and takes a long time to onboard merchants.

Not only is it timely to develop a BNPL solution in-house, but it also requires ongoing maintenance and continual development to cater to merchant-specific requirements, such as SKU-based financing and e-commerce platforms. Components that can be easily included in a white-labeled platform.

Several banks have deployed their POS offerings successfully in this manner, such as The Commonwealth Bank of Australia (CBA), which offers StepPay.

Other banks feel that buying an existing BNPL player is a faster go-to-market alternative.

But there’s another option: Using an easy-integration white-label technology, banks can onboard merchants at scale. We’re talking hundreds of merchants a year instead of a handful.

As one example, a leading bank that previously took 18 months to onboard a new merchant is now adding new merchants in as little as a couple of weeks using our point-of-sale financing platform.

The idea is that the white-label BNPL platform can integrate with a bank’s existing system and efficiently cater to merchants’ needs. Banks can choose a virtual card option, which doesn’t require any integration with the point of sale or a simple, one-time integration via API. This translates to faster time to market, easy scalability, and quick adjustments if needed.

As the BNPL solution is white-labeled for the merchant and bank and embedded into the customer journey, banks can offer financing solutions where and when consumers need them most.

Competence. Chart with keywords and icons. Notepad on gray table

Everyone sticks to their core competencies

Some argue that the largest BNPL fintech leaders act like banks, blurring the lines between financial institutions and tech startups. But fintechs don’t have the same balance sheet capabilities.

From experience, it is always best to keep finance and technology separate to an extent, with all players sticking to their core competencies.

However, banks could start acting more like fintechs by partnering with a third-party white-label provider. They can continue doing what they do best, like balance sheet lending, and technology companies can deliver cutting-edge tech while complying with banking regulations.

As the growth of BNPL continues, banks must contemplate how or if they want to participate.

Those who hesitate or decide against it may risk losing access to a generation of consumers with varying credit needs. Of all the go-to-market options available, white-label services have great potential to increase approval rates, build brand equity, and speed up the time to market.

  • Yaacov Martin

    Yaacov Martin is the CEO and Co-Founder of Jifiti, a global fintech company. He is a thought leader, panelist, and active contributor to leading payments and fintech publications.