Single-Lender vs Multi-Lender BNPL: What Every Retailer Needs to Know

by Nici Pillemer


June 12, 2022

We live In a world of consumer diversity – different shoppers with different credit profiles are making different purchases.

So why offer them a one-size-fits-all BNPL solution?

61% of consumers that use Buy Now Pay Later would prefer a BNPL option provided by the merchant that they are buying from instead of from a third-party provider.

Merchants that offer the right types of BNPL options to their customers stand to increase sales, customer loyalty and average order value by up to 70%.

The difference between single-lender and multi-lender waterfall consumer financing can mean all the difference between making that sale or not. 

While consumers don’t feel a difference in the process, the outcomes of each can make or break a sale.

Keep reading to find out why choosing between single lender and multi-lender BNPL really matters – and how to decide.

What is a multi-lender BNPL platform?

A multi-lender BNPL platform seamlessly connects to the merchant’s point of sale and gives consumers access to a network of tiered lenders and consumer loan programs through one application. 

Instead of applying to multiple lenders for a consumer loan, the consumer can simply apply once at the point of purchase through a multi-lender platform.

This one application gives the consumer access to multiple lenders and loan programs. 

What is multi-lender waterfall financing?

Multi-lender waterfall lending is the process of smart-routing or ‘cascading’ the customer’s application from a prime lender through to secondary lenders for the purpose of maximizing the financing acceptance rates.

It is a single-user journey that unlocks a multi-lender waterfall of all pay-over-time options for your customers.

A multi-lender platform with waterfall is not simply a marketplace of lenders. It is a solution that is designed to optimize customer acceptance rates and help merchants maximize their customer conversions and sales through tiered financing. 

What types of lenders are in a multi-lender BNPL platform?

Prime lenders are tier-1 lenders that typically accept only borrowers with high credit ratings. Secondary lenders will generally approve near-prime borrowers, who generally have less than perfect credit scores. 

Prime lender can’t approve your customer?

No problem – the multi-lender waterfall will automatically redirect the application through to a secondary lender. These secondary, or second-look lenders are typically not banks. The consumers that are accepted by secondary lenders are consumers who deserve a second chance at obtaining a point-of-sale financing solution.

Single lender vs Multi-Lender Waterfall Financing

Single LenderMulti-Lender with Waterfall
One application
Optimized approval rates
Diverse loan options

What’s the difference between single-lender and multi-lender POS financing?

With single-lender point-of-sale financing, the customer’s BNPL application is directed only to one lender. If the lender doesn’t approve the customer for financing, then that consumer will need to apply again to another lender. Reapplication for financing potentially means another credit pull and a negative financing experience can also can deter the consumer from making the purchase.  

Multi-lender BNPL, on the other hand, gives the customer greater opportunity to get approved for financing, without needing to reapply. At the end of the day, this translates to more sales for the merchant.

Why do merchants need multi-lender waterfall financing?

In a world where different consumers with different credit profiles are buying different products, multi-lender waterfall financing has become a must-have, instead of a need-to-have.

BNPL in general is known to increase customer lifetime value (LTV), the total value of a single customer to a merchant over their lifetime. Multi-lender BNPL even more so.

Here are some of the key benefits of multi-lender waterfall BNPL:

  • Waterfall lending helps maximize customer approval rates
  • Higher approvals means more customer conversions
  • Waterfall also helps increase customer retention

How does multi-lender waterfall work?

The whole point of multi-lender waterfall is to make it as simple as possible for a customer to apply and get approved for point-of-sale financing.

This is how it works:

  • Customer applies for financing at checkout.
  • Based on the customer’s risk profile, he’s not eligible for prime lender financing.
  • Waterfall automatically redirects his application to a second-look lender. 
  • Customer gets approved. 
  • Customer has a positive experience and returns to that store to buy again.

How does multi-lender POS financing help increase repurchase rates?

This all boils down to customer experience.

When a shopper has a negative financing experience with a brand, it’s likely to leave a bad taste in their mouth, and they’re less likely to shop again at that store.

But when the financing experience is positive – particularly when the BNPL solution is white-labeled in the merchant’s brand – customer satisfaction and trust rises and the merchant’s brand equity gets a boost.

By offering a white-labeled multi-lender solution, merchants provide higher approval rates, leading to positive customer experiences with their brand and, ultimately, a higher customer repurchase rate.

Single integration, multi-lender BNPL solution

Multi-lender with waterfall has become a vital requirement for both merchants and lenders that offer Buy Now Pay Later to consumers. A single integration to the right multi-lender platform can have a significant impact on sales, average order value and customer lifetime value.

BNPL whitepaper for merchants

Disclaimer: The information in this article is for informational purposes only, and should not be construed or relied upon as legal advice on any subject matter. The author is not responsible for any consequences whatsoever arising from the use of such information.

Jifiti is transforming point-of-sale financing with cutting-edge technology, data and BNPL solutions.

Our white-labeled Buy Now Pay Later bridging the gap between retailers, lenders, and consumers.