Though once a rare gem in the credit market, Buy Now, Pay Later (BNPL) services have skyrocketed in popularity. The Bank for International Settlements reports that BNPL activity increased more than sixfold globally from 2019 to 2023, with continued growth in 2024.

Where popularity grows, however, a spike in regulatory attention is sure to follow.

With the new European Consumer Credit Directive 2 (CCD2) taking direct aim at BNPL services, BNPL providers must optimize their operations through modern technologies to ensure thorough, fair, and fast creditworthiness assessments.

Creditworthiness assessments: A new key CCD2 requirement for BNPL providers

Published in 2023, the CCD2 implements new requirements for BNPL service providers, holding them to the same regulatory rules and standards as traditional lenders.

The most significant regulatory change introduced in CCD2 for BNPL providers is the requirement to conduct thorough creditworthiness assessments. Specific details surrounding CCD2 creditworthiness assessments include:

• BNPL providers need to establish a comprehensive view of each customer’s financial health across multiple factors, including income, debt, and ongoing expenses.
• Each creditworthiness assessment must be based on accurate and up-to-date financial information belonging to the customer.
• Customers must have access to human intervention in all automated processes involving their personal data.
• BNPL providers must give customers the ability to request and obtain a reasonable explanation of their creditworthiness assessment, as well as the ability to request a review of said assessment.

These creditworthiness assessments ensure responsible lending practices, preventing lenders from distributing funds to customers unable to make their repayments.

With Open Banking technologies, BNPL providers can optimize and automate their creditworthiness processes in alignment with new CCD2 requirements.

The challenges of CCD2 creditworthiness assessment in France

France is home to a booming BNPL market. In 2024, Statista predicts BNPL transactions will rise by 15% compared to 2023. By 2029, the total BNPL transaction value in France is expected to reach US$2.1B, giving France more than 6.3% of the BNPL market share.

With the new creditworthiness assessment mandate, French BNPL providers must leverage Open Banking technologies to overcome the following emerging challenges:

• Collection of customer data from multiple sources (checking accounts, savings accounts, investments, etc.)
• Enhancement of cybersecurity measures when handling customers’ personal and sensitive financial information.
• Efficient, real-time execution of creditworthiness assessments to protect profit margins while ensuring highly accurate and fair assessment processes.

In short, without the use of proven digital solutions that leverage automation for creditworthiness checks, BNPL providers won’t be able to comply with the new CCD2 regulation and ensure high UX and profit margins.

Case study: How Alma utilizes Powens’ Bank solution to offer BNPL

Alma, a BNPL provider dedicated to the retail industry, relies on the Powens Bank solution for bank aggregation services. With Powens’ Bank capabilities, Alma can assess the creditworthiness of customers using real-time data validated in a matter of seconds.

Integrated into the merchant sales funnel, Alma needed the ability to validate requests for BNPL services at checkout instantly. The Bank solution enables Alma to recover relevant, secure, and compliant information on-demand, allowing for a seamless shopping experience free from fraud.

“Powens fits perfectly into our use case: technology quality, ease of integration and pricing policy adapted to a startup. The integration was extremely fast: in one day we were able to retrieve our customer’s bank data” – Louis Chatriot – co-founder and CEO of Alma.

Alma serves over 6,000 merchants and, with Powens, can optimize its rate of positive decisions without increasing risk. Moreover, Alma can reach traditionally underserved customers with its BNPL services, including freelancers, artisans, and independent drivers.

Powens streamlines creditworthiness assessments for BNPLs

Powens’ Open Finance and Embedded Banking platform equips French BNPL providers with the tools necessary to comply with CCD2 and offer a seamless lending experience.

Through our Bank solution, BNPL providers can perform comprehensive and automated creditworthiness assessments that align with the requirements of CCD2 using innovative Open Banking technologies.

Powens provides the bank aggregation capabilities you need to simplify compliance and gain a holistic overview of your customers’ financial health and status. Open Banking features of the Powens platform include:

• Rich data access with Europe-wide coverage across 1,800 financial institutions and 12 European countries, as well as an unmatched 99% coverage in France.
• Real-time transaction data, including operation date, amount, currency, label, and transaction type.
• Current account data, including historical, currently available, and incoming data.
• API depth and quality, with end-to-end tests with real bank accounts.
• User-friendly admin dashboards for configuring domains, client applications, webhooks, and connectors.

Powens empowers modern lending services and helps BNPL providers streamline their lending and compliance processes. With coverage across Europe, Powens is your go-to technology provider for enhancing your BNPL offerings.

Book a demo today to get started.

Leyla Vivanco