One major challenge is that BNPL arrangements can handicap lenders and servicers because they often lack visibility into these obligations until it’s time for repayment. This lack of foresight can lead to difficulties in forecasting and managing cash flows effectively, potentially causing delays and/or gaps in collection efforts.

Moreover, when BNPL payments come due, subprime and near-prime customers are particularly susceptible to overextension. They may have committed funds from sources such as tax refunds, leaving them financially strained when these payments are due. This overextension increases the risk of delinquency and default, necessitating proactive and sensitive collection strategies to address these challenges effectively.

Overall, the rapid adoption of BNPL offerings underscores the importance of adaptable and innovative collections processes and collections software to accommodate evolving consumer preferences and financial behaviors.