Episode Details

Every payment tells a story about a member’s financial life. The challenge for credit unions is that more of those stories are now being told somewhere else.

Buy now, pay later (BNPL) has transformed from a checkout convenience into a growing part of how consumers manage cash flow, budget, and make purchasing decisions. While these installment options create flexibility for members, they also create new relationship opportunities for the financial providers that offer them—opportunities many credit unions have yet to capture.

In a recent PaymentsJournal podcast, Adam Hodz, Managing Vice President of Payment and Channel Solutions at Velera, and Ben Danner, Senior Debit Analyst at Javelin Strategy and Research, discussed the evolution of BNPL usage and how credit unions can differentiate themselves by integrating BNPL  capabilities into their offerings.

At its core, BNPL is about giving consumers more choice. That makes it more critical for credit unions to deliver a comprehensive suite of solutions that keeps them at the center of members’ financial lives.

From Financing to Money Management

In its early stages, many viewed BNPL as a modern form of layaway, allowing consumers to split larger purchases into manageable installments. While that use case still applies, today’s BNPL landscape has evolved beyond that original concept.

“It’s an evolution from a financing option for large purchases into everyday money management,” Hodz said. “The buy now, pay later conversation is shifting from, ‘Can consumers finance and purchase?’ to consumers expecting flexibility in all transactional situations. Whether it’s online or in-store, they want that flexibility.”

Mounting evidence shows that a significant portion of BNPL transactions are used for everyday purchases under $30, and some consumers rely on these products on a weekly basis.

As installment payments become a common tool for budgeting and cash flow management, credit unions that offer only traditional card products risk falling behind evolving member expectations.

“Smoothing out routine expenses, managing short-term cash flow, and helping to create a little more predictability in their budgets. If those options are available only through fintechs or merchant-driven providers, credit unions are going to risk being on the outside looking in,” Hodz said. “It’s incredibly important to offer those flexible payment channels that consumers and members are looking for to help manage their money.”

Payments Are Relationship Moments

One of the key reasons BNPL has become essential is that it allows credit unions to maintain a more complete view of member behavior.

Today, many BNPL experiences occur outside the credit union ecosystem through fintechs and merchants. This not only limits visibility into member activity but also creates risk that members will build stronger relationships with external financial services providers.

As more transactions move beyond a credit union’s reach, institutions lose opportunities to engage members through loyalty programs, personalized offers, and targeted promotions. These touchpoints are essential ways for credit unions to strengthen relationships and position their digital banking experience as the preferred destina