Thinking of launching a retail finance or Buy Now, Pay Later (BNPL) proposition in 2023? If so, you may be conscious of recent PR controversies surrounding the sector. It may seem like the media is waiting to jump on any opportunity to criticise businesses for getting on board with this popular payment solution.
Firstly, it’s important to say that most finance launches go ahead with no PR hitches whatsoever. However, there have been times when retail finance providers have come under fire.
Last year, Zilch was criticised for advertising its virtual BNPL cards to pay for shopping at Sainsburys. Apple was slammed for making their upcoming Pay Later too easily accessible to young people. And no sooner had Klarna and Deliveroo launched their “Eat Now, Pay Later” service than Martin Lewis of MoneySavingExpert waded in to cause a furore.
It is true that retail finance, like any form of credit, is not without its risks. That’s why we at Divido support the UK government’s decision to directly regulate the sector. And we have always worked with Tier One lenders who are compliant with the highest standards of regulation already. But we are nonetheless confident that the vast majority of retail finance users encounter no issues during their journey. In fact, we believe retail finance can be a force for good by offering customers more choice over how they manage their finances.
That’s why we’re always ready to hit back against claims that it can cause consumer harm. And if you’re launching a retail finance proposition this year, you should be too.
With that said, here are some of our tips to help you launch confidently.
1. Make some noise
When launching a retail finance or Buy Now, Pay Later (BNPL) solution, never try to fly below the radar.
Some businesses have done this in the hope the media won’t notice them launching a solution until it’s no longer newsworthy.
But in doing so, these businesses missed an opportunity to own their story and position retail finance as a benefit for their consumers.
Worse still, if they get discovered (and some have), they open the door for a negative PR pile-on – with no story of their own to defend themselves with.
Doing things the other way around – putting out a press release, inviting journalists to interview representatives, sending out marketing communications – allows you to set the pace of the narrative.
Your messaging should espouse all the benefits of your retail finance proposition. You can mention how retail finance offers customers more choice, that it allows them to make substantial purchases without needing to save up first, that it protects customers against future price rises, and that it is secure.
On that last point, you might like to mention the levels of security your retail platform uses. This could range from data protection, to the credit checks performed during each application, and whether your lender reports details of loans to credit reference agencies.
If your story is positive, uplifting and (most importantly) the first one out the gates, it will make life much harder for your critics.
2. Educate and inform
Much of the backlash against Buy Now, Pay Later and retail finance can be chalked up to the fact it is a relatively new industry. A lack of hard data and evidence has allowed myths and misconceptions to flourish.
BNPL has been compared to payday loans. It’s said to lead directly to ‘overspending.’ And as many retail finance customers use credit cards to manage their repayments, some say it puts customers into ‘debt spirals.’
Many of these sensational claims are unsubstantiated – but we can’t deny they are also catchy. After all, nobody likes debt.
So, what can you do? As a business launching a retail finance proposition, it’s up to you to fight back against the wave of misinformation. One way to do this is to lean on hard data and evidence to tell your story.
At Divido, we like to remind people of the following facts:
- The majority of retail finance customers complete their repayment plan with little to no trouble
- Most platforms, including Divido, run a soft credit search for pre-approval, followed by a hard credit search to ensure customers meet strict affordability criteria. No customer is guaranteed to be approved for credit
- Divido works with Tier One lenders, who have a mature approach to debt recovery. In the rare circumstances a customer is unable to continue paying back their loan, the lender will usually try to help that person by offering them a structured recovery plan
- Platforms are usually secured with the latest in cybersecurity technology. Divido uses Datadog for monitoring and logging, Synk for security scanning and Site24x7 for alerting
Another common narrative is that Buy Now, Pay Later and retail finance are ‘unregulated.’ This is not strictly true. BNPL and retail finance are not directly regulated, but these forms of payment operate within the framework of the 1974 Consumer Credit Act. This act included a so-called ‘loophole’ allowing for merchants to offer short-term loans for deferred payments, which has helped to enable the rise of Buy Now, Pay Later. But this is not the same as being unregulated. (And besides, that loophole is set to be tightened later this year when direct regulation comes into effect.)
When gathering information for your story, it’s a good idea to discuss with your lender and/or platform provider what steps they take to guarantee customer protection, and include this in your story.
You should also make sure this messaging is consistent throughout your journey and across your website, to help customers feel confident in their decision to choose retail finance.
In this way, you can not only protect yourself and your business against negative PR, you can help to rewrite widespread misconceptions of retail finance.
3. Fight back!
If someone decides to attack your brand anyway, you don’t need to lie down and take it. Instead, you should prepare a catalogue of responses to hand that will allow you to return fire.
Our own CEO Todd Latham is known to be outspoken when it comes to criticisms of retail finance. Todd regularly speaks on stage at conferences and events, writes columns for various publications and posts on his own social media and the Divido website, punching back against misconceptions of the industry.
In the unlikely event someone launches a PR campaign against your brand’s retail finance programme, the best thing to do is to respond swiftly and accurately. Whether by writing to the publication directly, sending a representative to take part in an interview, or posting on your own website, there is plenty you can say to debunk negativity – especially if you have the facts to back your counter-arguments.
Here are some quick and easy responses you may want to have ready in case someone decides to launch a broadside against your brand (just make sure these apply to your retail finance proposition):
- Paying with retail finance is not too different to paying with other forms of credit, such as a credit card – except retail finance and BNPL usually offers much lower and often 0% APR
- Lenders run an affordability check to make sure the customer can afford the loan. Customers with bad credit will often be turned down and no one is guaranteed approval
- Many lenders send regular reminders when a customer’s next payment is due, giving them plenty of time to arrange their finances
- When customers run into financial difficulties, lenders usually have a mature approach – penalising the customer is seen as a last resort
- Buy Now, Pay Later and retail finance are now overseen by the Financial Conduct Authority (FCA) in the UK, and customers have the right to escalate complaints to the Financial Ombudsman if they feel they have been treated unfairly
It may help to have at least one person at your organisation media trained, in case someone needs to speak to the media on camera in order to articulate your business’s response.
The bottom line
Retail finance is a form of loan, and the media is always ready to criticise loans. Sure enough, Buy Now, Pay Later and retail finance have come under fire from the media in recent years, which has given the industry a somewhat poor reputation. If you are thinking of setting up your own retail finance offering, you may be mindful of these criticisms.
But don’t let them put you off. Despite what some say, retail finance is a secure form of lending that benefits most customers. Furthermore, regulation around BNPL and retail finance is getting stricter in 2023 to the benefit of both merchants and customers.
If you are thinking of launching this year, it is important to have a structured approach to public relations. Be sure to espouse the positives of your retail finance programme, and don’t back down in front of media scrutiny. Retail finance offers far more benefits than potential consequences and is trusted by a wide range of customers. No wonder it’s one of the world’s fastest growing payments sectors.
Looking for a partner who can help you launch with confidence in 2023? Why not speak to the retail finance experts at Divido.