Paylater Can Improve Credit Scoring Formulas, How?

Paylater Can Improve Credit Scoring Formulas, How?

Since pandemic COVID 19 has taken the first place to affect consumer's behavior on digital ecosystem, Buy Now Pay Later (BNPL) is becoming one of the most attractive digital payment methods in Indonesia. The millenial and Gen Z customers in particular are thrilled with the flexibility to pay over time but without any interest, offering them the options for impulse or unexpected purchases.

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According to Statista report, Indonesian BNPL user has reached around 7.8 millions compare to the number of Singaporean BNPL user in 2020. It is expected to grow to 130 million and placed Indonesia to be the largest BNPL market in Southeast Asia by 2025, with the total BNPL spend on eCommerce projects to increase 8.7 times compared to 2020.

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While such a number can be a good sign for BNPL growth in Indonesia, it also may be a huge opportunity for both the regulators and the credit industry to include additional data point such as paylater into scoring formulas. Thereby, assessing people with little or no traditional credit to join the credit mainstream can be easier for any other fintech companies by assessing user's PayLater liabilities.

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Companies can now retrieve end-user's pay later data thanks to Brick's Transaction Data API which enables financial institutions in collecting end-users transactions that they do using PayLater method. On top of that, Brick's clients also can retrieve the insights of the customer's current account limit, usage, and balance.

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How companies can use Transaction Data API

1. P2P Lenders and Multifinance companies can use the pay later transaction data to analyze and score credit limits of the potential borrowers.
2. P2P Lenders and Multifinance companies can benchmark using the pay later limit and remaining balance to assess potential borrowers liabilities.
3. Credit bureau can enrich the information of the end-user's spending behavior on the related platform using PayLater option.

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How does Transaction Data API work?

1. Lender obtains end-user's consent to connect their PayLater account and authorizes client's access to retrieve their transaction score and related aggregated spend attributes.
2. Lenders submit a request of applicant's PayLater transaction score and aggregated spend attributes to Brick's API.
3. Bricks API response to the lenders, containing the request data.
4. Lenders leverage data for further credit underwriting process.