BNPL payment options continue to grow in popularity – which means financial regulations and industry scrutiny have also increased. It’s important for payment providers to assess their operations and adhere to responsible lending practices, to make sure they’re protecting consumers and providing customers with secure and supportive payment options.
At Splitit, everything we do is based around customer safety and satisfaction – we are committed to providing financial services that offer flexibility while protecting consumers and putting their financial health at the forefront.
Read on to learn more about how Splitit offers a responsible installment payment option for your customers.
Responsible Lending Practices
Responsible lending is grounded in principles that cater to the financial health and best interests of the people who are utilizing the service. The key aspects of responsible lending that apply to BNPL include:
- Affordability: Customers should only be offered payment plans and agreements that they can afford to repay
- Transparency: The conditions of the financial agreement must be clear, with all information disclosed upfront in an easy-to-follow format
- Support: Customers must be able to access help if they have questions or concerns
Splitit and responsible lending
Splitit works exclusively with customers’ existing credit cards, which means they’ve already been approved for the funding they utilize for their installment payment plan through the strict vetting process of their credit card provider.
We don’t charge any fees, interest, or late payment penalties, so customers are not at risk of racking up unexpected charges. Our team is also on hand to help answer customer questions and offer support when needed.
Responsible lending and BNPL
There are specific principles of responsible lending that apply to particular financial products, such as a credit card, bank loan, or mortgage, which the Consumer Financial Protection Bureau (CFPB) works to uphold through strict monitoring and enforcement of Federal consumer financial law.
As BNPL is a relatively modern payment solution within the ecommerce landscape, regulations are currently being shaped – learn more about the CFBP’s plans for US businesses and the FCA’s regulations for BNPL providers in the UK.
Promoting Financial Wellness
Splitit’s mission is to offer customers more flexibility within the checkout, with a budget-friendly payment option that fits their lifestyle and circumstances.
We partner with many different businesses, from ecommerce to services, to allow customers to access the things they want and need while maintaining their financial health.
We’re committed to financial wellness, which is why we:
- Work with customers’ existing credit cards, so they don’t need to apply for third-party financing, take out a new line of credit, or accrue additional interest on their purchase
- Stick to a strict no-fee, no-penalty platform – the only interest they may have to pay is that which is already associated with their credit card provider
- Offer several payment options for merchants to choose from depending on which is most suitable for their customer base (monthly, bi-weekly, deposit options and more)
- Provide a Pay After Delivery option, in which customers can receive their products before committing to them financially
Transparency and Fairness
With heavy criticism on the hidden fees and penalties that many legacy BNPL platforms pass onto their customers, it’s no wonder that regulators are planning to hold payment platforms accountable by introducing stricter rules and requirements.
We have always followed the guidance of responsible lending to ensure we’re providing our customers with fair and transparent agreements. For our customers, this looks like:
- No fees, interest, or penalties: Splitit never charges interest, fees or penalties for missed or late payments. As mentioned, their standard credit card terms and conditions do apply.
- Clear repayment terms: Customers typically make an initial payment, and the remaining purchase amount is placed as a temporary pre-authorized hold on their credit card. This hold drops off after a few days and the customer continues to make their monthly payments, according to their repayment schedule.
- Reasonable issue resolution: If a monthly payment is declined, customers have 7-days to resolve the issue and make the payment. If the transaction is still declined after the 7-day period, the full outstanding pre-authorized hold will be charged and their plan will be cleared.
- Clear repayment schedule: Customers can easily track and monitor their repayment plan through the customer portal, where they can see their current status and all past and future transactions.
Protecting Customer Data
As well as being monitored for the way in which they handle customers’ finances, payment platforms are being scrutinized for their data protection strategies. Many legacy BNPL platforms have received criticism for data harvesting and selling customer data for marketing purposes.
At Splitit, we are committed to protecting consumer data and keeping it private. We never pass customer information onto third-party platforms and we adhere to the strictest data protection protocols and the highest level of PCI compliance, which means we maintain a secure network (and regularly monitor and test them), and cardholder data is protected through sophisticated encryption. Our systems are GDPR and CCPA compliant, and we adhere to the latest global data security standards.
Providing Education and Resources
As well as ensuring that customers are clear about entering into their financial agreement, BNPL providers should also be able to support consumers at every stage of their repayment journey.
When using Splitit, customers will get a comprehensive overview of how it works and exactly what their repayment schedule looks like, so there are no surprises or unexpected terms. They’ll also have access to the shopper portal, where they can manage their repayment plan, update their information, and make early repayments if they want to.
At Splitit, we have comprehensive resources available for both customers and merchants within our Help Center. This means that your customers can access information 24/7 that will answer questions and help them understand exactly how their payment agreement works. If needed, they can reach out to the Splitit Customer Service team for further support.
Responsible lending is vital for both customers and payment platforms, as it ensures that the system works in the way it is designed to – shoppers can make use of flexible repayment options and merchants can to collect payment for their products and services. It’s that simple.
At Splitit, we are committed to making sure this agreement works on both sides of the transaction, which is why we have always adhered to principles of transparency and fairness for customers and merchants.
Get in touch to learn more about how we structure our platform to provide a clear and responsible payment solution for your customers.