Digital bank Zopa has launched its first suite of fully-regulated buy-now, pay-later (BNPL) products, called ‘BNPL 2.0.’
The focus will be on big ticket items valued at between £250 and £30,000, which would otherwise take consumers month to save up for. Zopa will use its own technology to run credit checks and affordability tests for all users, and it has pledged to only offer affordable credit.
It will share data with credit rating agencies to give other lenders a full picture of people’s debt positions. Zopa will also use its proprietary tools to help customers better consolidate and pay down their debt.
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The product roll-out will be staggered in two phases in order to better align with upcoming regulation.
“Against a backdrop of global financial uncertainty Zopa is entering the BNPL space to make instant, yet responsible lending decisions with products that are sustainable and fit for purpose,” said Tim Waterman, chief commercial officer at Zopa.
“Zopa is ushering in the era of BNPL 2.0, an evolution of BNPL that is regulated. We combine the seamless customer journeys and best-in-class digital UX offered by traditional BNPL players alongside the ability to underwrite longer, larger loans in a way that fully meets regulatory requirements.”
Zopa’s first product will offer retail finance for merchants. This will be followed with a consumer offering, once new regulation comes into place.
The UK’s BNPL market has been valued at £6bn, and some industry experts have predicted that total volumes will surpass £20bn by the end of this year.
Former P2P lender Funding Circle launched a beta version of its business-to-business BNPL product last year and said that demand had exceeded expectations.