Buy Now, Pay Later The Member-Friendly Way

Advantage Plus has entered the BNPL arena and is crafting a solution to ensure members don't overextend themselves.

Top-Level Takeaways

  • Millions of consumers have taken advantage of buy now, pay later offers, but credit unions have been slow to adopt such programs.
  • When a dive into ACH data revealed members were using BNPL options, Advantage Plus FCU started working on its own solution, which it will launch by the end of the year.

Buy now, pay later services and offers have exploded onto the financial scene. Last year, the BNPL industry was worth $97 billion, according to a September 2021 CNBC article. And according to the Consumer Financial Protection Bureau (CFPB), just six BNPL companies made 180 million loans totaling $24.2 billion in 2021.

With retail outlets, credit card companies, digital payment providers, and alternative lenders all entering the BNPL space, it’s never been easier to make a major purchase and split smaller payments across several installments. For consumers concerned about inflation and rising interest rates, such short-term financing is tempting, but how much is too much for an individual’s budget to bear?

That’s one of the key questions Advantage Plus Federal Credit Union ($253.8M, Pocatello, ID) is addressing with a BNPL program it is rolling out at the end of 2022. Here, Adam Brown, chief information officer for Advantage Plus, shares his cooperative’s rationale behind offering BNPL and how the credit union has made a member-friendly solution.

Why is Advantage Plus embracing buy now, pay later?

Adam Brown: A lot of it has to do with the product’s popularity. By analyzing our ACH data, we can see many of our members are using BNPL products through other vendors and using our debit cards to make their payments. We want to provide members an option from the hometown financial institution they trust.

Like everything we offer, we pride ourselves on having our members’ best interests at heart, which is why we’ll offer the product only to members we believe have room in their budgets.

How does Advantage Plus help members balance financial wellness with the additional debt BNPL can create?

AB: We’re always focused on setting up members for success and structuring our relationships with their best interests in mind. BNPL is out there, and it’s not going away. Unlike other providers, we have visibility into our members’ broader financial picture. We know if they have loans with us, and with checking account and debit card data, we can see what they’re depositing each month and if they are already making monthly payments to another BNPL company or financial institution.

“We pride ourselves on having our members’ best interests at heart, which is why we’ll offer the product only to members we believe have room in their budgets.” — Adam Brown, Chief Information Officer, Advantage Plus FCU

We’ll be able to use our BNPL engine to set limits and send offers only to members we believe can handle the planned payments, and members will be able to log in to online banking and see all their BNPL plans plus their credit union loans and deposit accounts in one place.

How did you select a vendor? Did you prioritize a specific functionality or integration?

AB: We started looking at vendors in the summer of 2021 and signed with Equipifi in the spring of 2022. As a management team, we liked that it was focused exclusively on this product and shared our vision of doing what’s right for the member versus maximizing profits. Currently, we’re working with our core and card processor on integration and expect to launch by the end of the year.

How will members be able to access the credit union’s BNPL options?

AB: BNPL offers will be enabled through the debit cards our members are already using. The core integration will help us generate offers that are lower risk to the members and the credit union. The online banking integration will allow us to offer BNPL to members as an extension and enhancement of their experience.


Advantage Plus FCU
DATA AS OF 06.30.22

ASSETS: $253.8M
MEMBERS: 22,070
12-MO LOAN GROWTH: 15.2%
ROA: 1.43%

We’re still in the final stages of design but want to integrate the feature within our mobile app in addition to online banking. Equipifi will also offer an app so members will have multiple options.

Does the credit union have specific goals or revenue targets for this program?

AB: The goal is to create a self-sustaining program members will use again and again. We view it as similar to bill pay — we want to help members in a responsible way. Generating revenue is not our primary focus, although we do expect BNPL to cover its costs after the initial ramp-up period. In addition, we hope to attract new members. There is a demand out there, specifically with younger consumers.

October 3, 2022

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