BNPL Helps UK Consumers Manage Expensive Vehicle Repair Costs

In a recent interview with PYMNTS, James Jackson, CEO of U.K. auto startup Bumper, stated, that the recent record slump in new car sales, driven by supply chain disruptions caused by the Ukraine war and a cost of living crisis in Europe, has resulted in a notable increase in the average age of vehicles in the region. Jackson highlighted that older vehicles on the road tend to incur larger repair bills. As a response to this growing trend, Bumper’s repair now, pay later (BNPL) service, which allows customers to split car repair costs over interest-free monthly repayments, has experienced a positive impact. In addition to benefiting dealers on the platform, Bumper’s B2C proposition has also contributed to the company’s overall growth, creating a double-sided network effect.

«The older the vehicle on the road, the bigger the repair bill most likely is,» Jackson said. To ensure accurate underwriting and stay ahead in the lending industry, Bumper has leveraged artificial intelligence (AI) and machine learning to analyze various datasets. Jackson emphasized the utilization of repair history, vehicle data, consumer finance data, and behavioral data as new sources of information for assessing customer eligibility. This approach allows Bumper to underwrite customers more effectively compared to traditional BNPL providers. «We call it a double-sided network effect. It’s benefiting the dealers and also helping to drive growth for Bumper as well,» he mentioned. 

As part of its strategic approach to establishing a strong presence in the European auto market, Bumper recently introduced a card terminal that enables dealers to offer BNPL options directly at the terminal. Additionally, Bumper has embraced open banking technology, which Jackson described as «just another enhancement to help digitize and make payments smoother in dealerships.» Open banking facilitates real-time access to customers’ credit history and enables quick and secure account-to-account (A2A) payments, significantly improving the BNPL experience.

«We’re using the actual repairs and the past items as well as vehicle data, consumer finance data, and behavioral data as new data sets to help underwrite customers,” he noted. 

The adoption of open banking payments has been transformative for Bumper, as dealers have shown significant demand for this payment option. The A2A option not only benefits customers looking to split car repair costs but also facilitates open banking payments for car sales. Jackson revealed that since the introduction of open banking payments, Bumper has processed approximately £3 million to £4 million in transactions. «Paying ‘pennies rather than pounds’ is a much more attractive option than having to pay a 1% card fee on an expensive auto repair bill,» Jackson added. 

Jackson emphasized that open banking payments offer advantages beyond cost savings. The speed of payment is a critical factor, especially in the current economic downturn.»With open banking payments, dealers receive payment in seconds, rather than waiting two or three days,» Jackson said. This accelerated transaction speed, coupled with the ability to minimize fraudulent payments, will continue to drive the growth of open banking payments in the automotive sector.

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