Brad Bardell, Director of Fraud Solutions at Demyst, has a simple warning for Buy Now, Pay Later (BNPL) service providers: “As soon as organizations adopt something, the criminal underworld or the criminal fraternity really accelerate in adapting it to their own needs.”

The market for BNPL services continues to expand, with growing numbers of payment providers scrambling to gain new customers. The fear of losing potential business has pitted security concerns against customer service, and some providers take shortcuts that end up being self-defeating.

“A lot of organizations are using mobile phone numbers when they're registering accounts and then subsequently using it for two-factor authentication,” Bardell said. This can be a problem when customers get new numbers and their old phone numbers are reassigned to new users.

It’s important that BNPL service providers check customer details against current information to avoid a wide range of problems. Even when recycled cell phone numbers don’t provide an opening for criminals, it’s still awkward for a new customer to receive personalized messages addressed to a number’s previous owner.

Other issues can arise when a customer’s email address was created recently. The number of digital buyers is increasing every year, which means that they might be legitimate purchasers, or the addresses could have been created with something more sinister in mind. Bardell said that an important capability for BNPL providers involves “Being able to identify and put some risk guardrails around those types of customers.”

Bardell emphasized the importance of finding relevant data solutions that can adapt to new business requirements. “It's not just having one or two silver bullets to address customer onboarding,” he said. “It's having sufficient data to address the multitude of use cases to mitigate risk.” 

BNPL service providers are also looking to integrate new data so that they can expand into foreign markets, which can be challenging if their main source of information is not replicated in other countries. This applies not only to credit decisions for individual consumers, but also to business registry information used in onboarding new merchants.

“A lot of organizations and a lot of countries are now accelerating their modernization of business registries and access to information and open data generally,” Bardell said. But their uneven pace of adoption has meant a patchwork of solutions that can involve dedicated web portals or in-country agents reviewing paper documents. 

“What we're finding is that organizations will want [access to] a multitude of registries, so that they can tap in at real time and have that to meet their compliance obligations,” Bardell said. He noted that Demyst works to help clients standardize how they collect and review this information.

The Demyst platform offers ready-to-deploy data APIs for KYC, fraud, compliance, and credit decisioning. It allows BNPL providers to aggregate global data from multiple providers into a single, configurable data feed, rapidly integrating and deploying data solutions for consumer risk and merchant risk.

Create your free account on the Demyst platform and start leveraging data in flexible ways.