The challenge

To this end, the BNPL provider identified that expanding the amount of supported payment methods on their platform to include various popular digital payment methods in their various markets of operation would be key in enhancing their proposition. As things stood, supported payment methods on the was limited to debit and credit cards payment only. Enabling additional methods would therefore provide a more flexible and convenient shopping and payment experience.

In addition to improving the customer experience, the BNPL provider recognised that enabling alternative digital payment options would also have the potential benefit of improving the efficiency of internal processes. For example, the complete reconciliation of credit card transactions and the subsequent crediting of funds to accounts would generally take 2-5 days. Additionally, late or overdue payments had to be tracked and reconciled manually, which left room for potential delays to payment collection stemming from human error. Removing manual intervention from these processes would therefore help reduce the rate of late payments, and consequently improve cash flow cycles for them and their customers.

The solution

The BNPL provider joined forces with HSBC to develop an automated collection process in Singapore through an end-to-end API integration, which enabled them to allow customers’ to select direct debits via Fast and Secure Transfers (FAST), Singapore’s real-time payment clearing rail, as a payment option on their platform. As part of this process, customers first submit real-time direct debit mandates online. This has significantly reduced the time taken for direct debits to be set up from 6-12 weeks via the traditional process to mere minutes, allowing customers to establish direct debit as their preferred payment method almost-instantly.

Upon successful setup of the direct debit mandate, funds are then pulled automatically from customers’ mandated bank accounts at specified times through FAST, which credits funds to the BNPL provider’s accounts in seconds. Customer information is fully reflected in each received payment, which eliminates manual reconciliation from the process altogether.

Additionally, as FAST is available 24/7, customers can now set up and pay their installments via direct debit on the BNPL provider’s website or mobile app anytime and anywhere they want.

*Note, instant payments require the debiting bank’s participation in the SG FAST Payments scheme.

Benefits

• The automation provided by the real-time direct debit solution has improved the straight-through-processing rate on the BNPL provider’s collections to 99%, and significantly expedited the rate at which funds are received from customers. This has led to lower costs and optimised cash cycles for them and their merchant partners.
• Simplified, digital direct debit mandate submission provides customers with more means of completing their orders immediately following account setup, providing a better client experience
• Significant reduction of errors in the reconciliation process helps to reduce time spent on resolving discrepancies
• Incorporation of additional payment options helps to differentiate the provider’s BNPL proposition further in the market

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