TWIP: BNPL, Alexa, luxury e-commerce
Just when you thought about buying now, paying later (BNPL) couldn’t grab the headlines anymore, this week Mastercard entered the space with a ‘build your own’ installment capability enabled at the moment. back by, among others, an open bank, via Finicity in the US This offers BNPL capacity to some 78 million merchants using Mastercard rails. This was in addition to indications that BNPL is increasingly being used for higher-priced luxury purchases. It was also a big week for Amazon Alexa and the future of the spoken word business.
Jay Deen, CTO at Vindicia joined PYMNTS to talk about Payments Week, starting with the big changes coming in the ever-evolving BNPL space.
As for the Mastercard coup at BNPL, Deen said, “I think there is just a tendency in general… for traditional financial companies, and banks in particular, to lose to more innovative methods. In the case of buying now, paying later, [it’s] the ability to defer payments and be able to buy things as early as possible. Open banking has been around in Europe for a long time. In North America, for many reasons, it was more complicated. But we see a push towards it, so it doesn’t become a barrier to innovation. “
With open banking seen as an outlier and an ever-hot topic that has yet to fully materialize in the United States, Deen denounced lawmakers for being slow to act, adding that “there are so many banks, especially in the United States, and [among] small and medium-sized banks … I think there’s going to be some kind of push to get there. With open banking, it also reduces the friction of switching financial service providers, so it’s kind of a catch-22. “
Deen foresees an expansion and democratization of BNPL, noting that the advantage of working on Mastercard and bank rails is that “you can get innovative programs, like buy now, pay later, which has been around arguably a long time, but now. it’s faster in terms of digitizing this process. I think we’ll see more of this type of innovation around FinTech, in general, whether it’s from a bank or a startup in Silicon Valley. “
As for Mastercard’s dive into BNPL in particular, Deen said, “It’s built into their DNA” and thinks we’ll see more from other big players.
“Without a doubt, [for] traditional issuers and credit card companies, it’s in their wheelhouse, and… there’s no reason they can’t be able to innovate very quickly with [BNPL] and become the de facto standard for this, no different from … defer payments. You can just do it on a specific item.
Related news: Open Banking, BNPL and banking transformation
The week also saw PYMNTS release back-to-back studies from Amazon Web Services and RightPoint, respectively, addressing the evolution of major buys and BNPL’s move into the luxury space – a pivot away from cosmetics and fashion. quick who started it all.
“I think [BNPL] transmits to more premium brands, ”Deen said. “Traditionally they were in the storefronts and they would have a very personalized experience. I think they need to find a way to digitize this process and customize it … like [using] augmented reality to see what you would look like in a costume or luxury item, handbag, whatever it is. There’s just a broader trend to create a much more premium experience and increase the number of channels you can sell to customers on.
Also look: New Studies Indicate Consumers Buy Big Tickets Through Digital Channels, BNPL
The conversation took a quick detour from luxury and BNPL shopping to Amazon’s high-end makeover announced this week, topped off with the unveiling of its third annual star-studded fashion show, this time with lingerie brand Savage X Fenty from Rihanna in the lead.
Deen said: “Luxury conveys a certain experience or a certain type of ambitious lifestyle, and what’s important is how you position that and share that experience, whether it’s digitally or in person through touch and the feeling.”
He continued that “this fits a larger trend with the traditional way of shopping in terms of Amazon, and it’s great, but we are seeing more and more influencers taking advantage of channels like Instagram and TikTok. to provide social proof on luxury and lifestyle items. I think we’re going to see more of these active channels when it comes to luxury goods and items. “
We can expect to see that reflected in the holiday sale, as Deen said: “I think there is definitely pent-up demand. I think people are, dare I say it, a bit over the challenge of being at home. And I think it’s going to be a successful retail year. He added that BNPL teaches consumers not to “postpone experiences and therefore I think it will shift to the retail channel and the way people shop during the holiday season.”
Related News: Amazon’s Extreme Makeover Pays Off With Entire Ecosystem Embracing Fashion
Speaking of all things Amazon, Alexa topped the midweek news cycle as the e-commerce giant unveiled a range of new apps and hardware, all taking voice to the next level.
As PYMNTS reported, “The company showcased several new devices and reported that customers have connected over 200 million smart home devices to Alexa and are connecting millions of new devices every month. The headline was a household robot named Astro, which features Alexa on wheels. The device is touted by Amazon as a home robot for home monitoring, along with Alexa. It is equipped with a camera, is controlled by an app when the owner is away and is able to navigate around obstacles.
Deen dramatically simplified it, saying, “It comes down to Amazon [wanting] be part of your life. They want to be a part of it, whether it’s helping care for aging parents or making sure your family is safe. And I can basically make a purchase, whether it’s a miscellaneous item like toothpaste or toilet paper, or higher margin items. Whether it’s voice, video, any channel, any way to make a purchase, I think Amazon wants to make that easier.
Read more: Amazon relies on Alexa to connect to “all aspects of consumers’ lives”