AI payment intelligence firm Fraugster has rolled out a new program, Alternate Credit Decisions, to let buy now pay later (BNPL) and enterprise merchants to get more customers without incurring more credit risk, a press release said Wednesday (May 18).
The need for this comes because BNPL providers are reporting higher bad debt impairment rates compared to credit cards, the release said.
There’s also a spate of consumers experiencing service denials because BNPL providers and eCommerce companies are not able to accurately determine risk.
Alternate Credit Decisions is designed to improve BNPL scoring models with over 100 attributes, giving an accurate pictures of a buyer’s true credit risk.
That comes with “highly valuable” points like a transaction history, account history, purchase history and unpaid amounts.
“Our mission is simple, we want our customers to feel confident that they can trust the person they are approving to repay the amount they are borrowing,” said Christian Mangold, Fraugster CEO. “The positive results we are already seeing with trial customers make me confident that we can help the e-commerce ecosystem approve more customers without increasing exposure to loan defaults.”
BNPL has been gaining popularity, with Square using its acquisition of Afterpay to add more capabilities for in-person shopping.
Afterpay shoppers in-person will now be able to use a mobile wallet, containing their virtual Afterpay card, at the point of sale, and access installment payment options.
According to the report, sellers will be able to get the earnings from their sales right away.
Square says buying Afterpay has helped it get new customers and more revenue.
The company says sellers using Square Online have seen more transaction sales and buyer growth.