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Tuesday, February 18, 2025

Bloom Credit CEO Christian Widhalm: ‘Right Now, No One Knows What’s on Consumer BNPL Balances’

Bloom Credit Ceo Widhalm On Bnpl And Credit Reporting
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The rising popularity of Buy Now, Pay Later (BNPL) solutions raises questions for lenders that don’t have a standardized way to track a consumer’s use of BNPL products. Globally, the value of the BNPL market exceeded $37 billion in 2024, and it’s estimated to have a value of more than $167 billion by 2032. 

For a market predicted to grow in size by more than $130 billion in less than a decade, it’s not surprising that lenders want to know more about these customers — and their outstanding financial commitments — before making a decision on whether to extend them credit.

Photo of Christian Widhalm
Christian Widhalm is the CEO of Bloom Credit.

Historically, creditors have turned to credit bureau information to assess a prospective borrower’s creditworthiness. But companies who offer BNPL products don’t report their customers’ borrowing activity to the credit bureaus, creating a gap in a BNPL customer’s credit profile. 

No one’s come up with a remedy for that problem, one that meets the needs of the involved parties, including BNPL companies, credit card issuers and other lenders, and the credit bureaus. And these stakeholders don’t share a common vision on whether it’s essential to report BNPL customer data to the credit bureaus.

We spoke with Christian Widhalm, CEO of Bloom Credit, to discuss BNPL and its impact on the credit and payments industries. I’ve edited a transcript of our conversation with Widhalm for brevity and clarity.

Can you bring us up to speed on the background of BNPL as it pertains to credit reporting?

When BNPL started picking up steam in the early 2020s, the Consumer Financial Protection Bureau (CFPB) started to put pressure on both the BNPL companies and the major credit bureaus to get BNPL data reported. The CFPB really didn’t want consumers to overextend themselves with BNPL products.

So BNPL companies set out to try to figure out how to do this. But the credit bureaus are set up to accept data for traditional types of credit products like credit cards and auto loans, so there were some challenges there. And that caused everyone to kind of take a step back.

But the CFPB continued to push for this, so the bureaus decided that they were going to find a way to solve the problem. For about a year and a half, the bureaus were all trying to figure out how to get BNPL data in, and they all came up with different ideas. But, ultimately, nobody was able to come up with a clear answer, so the bureaus never got the data.

So, as of right now, no one knows what’s on consumer BNPL balances.

Are the BNPL companies in favor of reporting customer information to the bureaus?

The BNPLs have been leaning on the fact that reporting to the bureaus might negatively impact a consumer’s credit score. But the reality is, BNPLs think they have valuable data, and they don’t necessarily want that data to go to the bureaus. 

Part of the reason why is that they don’t want to deal with anyone trying to poach their clients. Because when the bureaus get data, they typically make that data available for pre-screened marketing offers

The good thing about BNPL solutions is that they’re for such a short amount of time. It’s not like people are stacking obligations over many years and growing long-term debt. 

Do you see any value in the BNPL companies sharing customer data with each other?

Even though BNPLs are a credit product, they’re kind of set up as a very quick payment product. So I think BNPL companies would be nuts to not share that data with each other or not use it if it was publicly available. 

Plus, sharing data should technically make access to credit cheaper because you’ll be in a better position to make a decision about who to offer products to, and you can lower rates to be more competitive.

How would it impact credit card issuers and lenders if they had more information about a consumer’s BNPL activity? 

If I’m a lender, and I know someone is using BNPL products, I would think about figuring out how to get them into credit card products. Credit cards are an alternative solution that have some benefits that could actually help recapture some of that BNPL spend.

Do you think BNPL companies should start considering running credit checks on their customers to determine how creditworthy they are? 

The BNPL providers have had a problem where, internally, half of them feel like they can’t do soft credit pulls on consumers because they offer a payment product, not a credit product. But the other half do feel like they offer a credit product.

I think a lot of them are hesitant to start requiring some sort of a credit check because they feel like they might lose an edge over their competitors. They probably think it’ll have some negative impacts in the market if their solution is listed as a credit product.