Last year, over 6 months into the pandemic, we published an article on The Financial Brand to discuss the emerging consumer need for more flexible financing options. Generational, economic, and political shifts toward the gig economy and non-traditional employment are creating demand for financing that accommodates irregular paychecks.

While Buy Now, Pay Later (BNPL) or point-of-sale financing has grown in popularity to meet this demand, as we discussed in the article, BNPL is not without its challenges. Like more traditional loan and credit products, managing fraud and credit risk is core to the success of BNPL. Australia, birthplace of many of the leading BNPL players, has been experiencing a spike in identity fraud in the last year, much of it driven by BNPL. In addition, over 20% of BNPL users have missed a payment in the last 12 months, according to the Australian Securities & Investments Commission.

Fraud attacks and high defaults come with the territory in online nonprime consumer lending and Enova has successfully navigated that terrain for over 16 years, growing the business to more than $40 billion in loans serviced to over 7 million customers. During that time, we have seen many competitors rise and fall. Commons themes that have led to the failure of many of these companies include:

  • Assuming more originations would inherently lead to profitability
  • Focusing on customer acquisition while neglecting customer retention
  • Automating today’s operations without designing an easy path to streamline tomorrow’s

Having overcome these misconceptions ourselves, Enova Decisions has taken these learnings and expertise from Enova to deliver enterprise fraud and credit decisioning solutions to mid-market organizations. Therefore, in the next series, we’ll address how BNPL players can profitably mitigate fraud and credit risk while delivering a superior customer experience.

Continue to Part 2: When Less is More

Why wait? Learn how you can optimize your fraud and credit decisions for your BNPL program.
Contact us today to get started.