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Capital One to Test Buy Now, Pay Later Service

Capital One’s battle against Buy Now, Pay Later appears to be over. The bank has revealed plans to begin testing its new service later this year in an attempt to gain market share in the fast-growing financial sector.

Capital One Reverses Course, to Test Buy Now, Pay Later Service

Capital One is jumping on the Buy Now, Pay Later (BNPL) bandwagon. The bank will begin beta-testing a new BNPL service later this year despite banning Capital One credit card users from using their cards to clear BNPL debt.

The bank sought to distance itself from BNPL services in December of last year, stating that “(those) kinds of transactions can be risky for customers and the banks that serve them.” The bank then outlawed customers from using Capital One issued cards to make “transactions identified as point-of-sale loans charged on its credit cards, regardless of the point-of-sale lender.”

Testing Of Service to Begin Later This Year

Now, Capital One is shifting focus and embracing BNPL. Capital One will be beta-testing its new service later this year using select merchants. The new BNPL service from Capital One will focus on the bank’s private-label credit card portfolio, including closed-loop retail cards.

BNPL’s Lucrative Appeal to Lenders

Capital One’s shift towards Buy Now, Pay Later appears to be occurring due to the runaway success the service has enjoyed in recent years. BNPL services and platforms have grown exponentially, with millennials and Gen Z consumers embracing platforms like Affirm and Afterpay.

Forbes data shows that consumers spend up to 20% more money on average when offered a point-of-sale BNPL service, making these platforms serious money movers. The new beta program also appears to be more than just a simple test. “We’re watching this product closely and certainly not taking this growth lightly,” Capital One CEO Richard Fairbank said earlier this week at an investor conference chaired by Barclays.

Related Article: Buy Now, Pay Later: Is It Worth It?

Featured image by 200degrees / PixaBay
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Cory Santos

Cory is BestCards.com's "Jack of all trades" and resident credit expert, covering all facets of the credit card space. In addition to credit cards, Cory finds that jogging, cats, and memes are essential parts of a balanced day.