BNPL is expanding its scope, and banks are finding their way into the narrative

A quarter into the year, the BNPL scene is bustling with activity — new deals and partnerships are emerging, some more unexpected than others.

The travel installment trend is hitting the high seas

Breaking from its usual retail focus, BNPL traded shopping carts for cruise decks, charting new territory this month. Online travel agency, Expedia Group, teamed up with Upgrade’s BNPL solution, Flex Pay, to offer installment plans for cruise bookings across five of its brands, including Expedia Cruises, Expedia.com, Travelocity.com, Orbitz.com, and Cheaptickets.com.

Upgrade is a consumer lending platform that offers personal loans, credit cards, and installment plans. For lenders like Upgrade, BNPL isn’t just about financing — it’s a customer acquisition tool driven by referrals from travel partners, says Tom Botts, President of Flex Pay at Upgrade.

Upgrade’s Flex Pay underwriting model relies on three key data sources:

• Credit bureau data: Traditional credit files from agencies like TransUnion, Equifax, or Experian.
• Alternative bureau data: Non-traditional credit history, including payday loan records.
• Past performance: Borrower history with Flex Pay or other Upgrade products, offering predictive insights.

But do underwriting factors shift when BNPL is used for cruise travel, where bookings are often made months in advance, versus everyday retail?

Yes, says Botts. Travel-related factors, like trip type and time between booking and departure, can help predict credit performance. While Flex Pay lets travelers book today and cruise tomorrow, most reserve months ahead, often paying off a chunk — or all — of their balance before setting sail. This helps to lower default risk.

Balancing Act: Navigating challenges and finding solutions

Integrating a BNPL solution across multiple Expedia Group brands can come with its own set of backend and operational challenges. But with experience from over 750+ partner integrations, Upgrade has fine-tuned its approach to deliver smooth deployment.

“Our team has decades of experience across airlines, hotels, OTAs, and cruise lines that enables us to speak their language and adapt our product as needed,” says Botts.

Flex Pay’s integration and deployment team collaborates closely with partners’ technical teams to simplify the integration. Upgrade customizes integrations to fit each partner’s individual business and technical needs, from backend payment infrastructure to branding and UI/UX, shares Botts.

“Flex Pay adapts to our partners’ payment processing system so that no back-end changes are needed to process the Flex Pay’s form of payment,” he says.

For instance, if a partner uses a third-party tokenizer for virtual card storage, Flex Pay integrates with that provider to ensure the existing payment infrastructure remains untouched. From kickoff meetings to technical demos and integration monitoring, the team provides full project management support to keep everything running smoothly.

“We have a robust Developer Portal with a step-by-step implementation guide and tokenization documentation that can be shared for full transparency,” notes Botts.

Integrating Flex Pay: A step-by-step process

The Flex Pay integration typically takes 4-6 weeks and follows a structured approach:

1. Kickoff & Alignment – Team introductions, business requirement reviews, and implementation planning.
2. Design Review – UX recommendations and approval of final designs.
3. Integration Development – Hands-on technical guidance, SDK access, and support.
4. QA & Validation – Comprehensive testing across browsers and devices, including end-to-end transaction checks.
5. Go Live – Launch timing, marketing coordination, and performance monitoring.
6. Ongoing Support – Continuous reporting, monitoring, and optimization.

“There are limited operational and technical challenges with Flex Pay being fully integrated for a seamless experience across all cruise points of sale. With this integration in mind, there is limited-to-no risk in disrupting cash flows and merchant partnerships,” says an Expedia spokesperson.

Building the foundation of the integration team: Flex Pay’s integration team undergoes extensive onboarding and continuous training. New hires shadow senior team members for the first 90 days before managing smaller accounts. As they gain experience, they transition to bigger enterprise accounts. The team also participates in annual training refreshers and monthly knowledge-sharing sessions on process improvements and product updates.

As for AI’s role in this process, Botts says the team is currently evaluating how automation can enhance efficiency.

“We are exploring using AI for meeting documentation, on-demand training of our products, and internal ticket creation for integration support,” he shares.

One of the more surprising developments in the BNPL landscape is its unexpected spillover into Wall Street.

The BNPL-Banking Crossover

As BNPL evolves, major financial institutions are becoming more involved in the space, influencing broader market trends and reshaping how Wall Street views alternative lending.

BNPL provider Affirm is taking its Affirm Card — a hybrid of credit, debit, and pay-over-time — beyond its own ecosystem and into the hands of third-party issuers. Through a partnership with FIS, Affirm is letting banks offer pay-over-time options, without requiring customers to carry yet another card. Any FIS-affiliated bank can now roll out its own version of the Affirm Card — no extra plastic needed. This opens the door for banks to tap into BNPL without reinventing the wheel.

Then there’s the reverse play — once wary of BNPL, traditional banks are now taking a proactive approach. 

Last month, J.P. Morgan teamed up with Klarna to roll out a B2B BNPL offering, bringing installment payment options to its business customers. Through this partnership, companies using J.P. Morgan Chase’s payments commerce platform will be able to split payments over time later this year, marking a significant step in BNPL’s expansion beyond consumer retail.

J.P. Morgan Payments also added Affirm to its merchant network a couple of days ago. Merchants on J.P. Morgan Payment’s Commerce Platform can now offer Affirm’s flexible payment plans, making biweekly and monthly installments a part of the checkout experience.

Last month, another Wall Street firm, Citi, brought its in-house BNPL offering, Citi Flex Pay, to Apple Pay — blending BNPL with tap-to-pay convenience.

“With the Apple Pay integration, it really is as simple as tapping ‘pay later’ at checkout, choosing a payment plan, and then double clicking to confirm the purchase and authenticating with Face ID or Touch ID,” says Jeff Chwast, Head of Card Digital Strategy & On Card Lending at Citi.

Citi Flex Pay’s rollout onto Apple Pay

Citi introduced Flex Pay in 2019, a post-purchase pay-over-time plan that allows eligible Citi credit cardholders to convert qualifying purchases into fixed monthly payments. While primarily a feature for existing Citi credit cardholders, its recent integration with Apple Pay among other digital platforms makes the solution more widely available, driving more card engagement and usage.

“Citi is one of the first large US banks to integrate an installment lending solution with Apple Pay, one of the most widely used digital wallets in the world,” notes Chwast. “This is a major milestone in making flexible financing solutions more accessible and convenient for millions of customers.”

Apple Pay users with Citi credit cards can now split purchases of $75 or more into fixed monthly payments at checkout using Flex Pay. Currently, Citi is offering a 3-month plan with no fees or interest, while extended plans come with a fixed monthly fee, shares Chwast.

Participating units: Citi’s Branded Cards and Lending team led the Citi Flex Pay integration with Apple Pay, working alongside its Technology and Marketing teams, shares Chwast. 

“Within the Lending business, the team I lead is focused on innovation, technology, and partnerships to enhance the customers’ digital wallet,” he notes. “We, of course, also worked closely with Apple on the integration to ensure a seamless and secure experience for customers.”

Finding a foothold in the bustling BNPL landscape: Last year, Affirm and Klarna also rolled out their pay-over-time options within Apple Pay at checkout. With these established BNPL players in the mix, how does Citi Flex Pay stand out?

Chwast explains how Citi Flex Pay is carving out its own niche:

• Accessibility: Citi Flex Pay is built into the US Branded Cards portfolio, which serves over 35 million accounts. Citi Flex Pay is available through the Citi mobile app at any merchant where Citi credit cards are accepted, as well as merchants that accept Apple Pay and Amazon Pay. Flex Pay is also available at Amazon.com, AmericanAirlines.com, and for customers booking travel through Citi Travel. 

“Citi Flex Pay sales have seen double-digit growth every year since launch [2019] as customers continue to adopt the embedded card payment feature,” shares Chwast. “Last year, Flex Pay saw growth of more than 25% vs. 2023.”

• Ease of use: Citi Flex Pay is built into Citi credit cards, which creates a smoother experience for users. Customers choose the monthly payment plan that works for them and agree to the number of payments and monthly fees upfront. Everything is included on one credit card bill, making it easy to track instead of managing multiple bills from different providers. Moreover, because Citi Flex Pay is already part of Citi credit cards, customers don’t need to apply or undergo a credit check.

“Unlike non-card pay over time offerings, Citi Flex Pay is not extending credit to customers, but rather helping customers leverage their existing credit line in a more transparent and controlled way,” notes Chwast.

• Value: With Citi Flex Pay, cardmembers can pay over time with no fees or interest while earning rewards from their Citi card, helping them get value out of their purchases.

• Trust: Banks benefit from a strong foundation of consumer trust. A recent J.D. Power survey shows that card-based pay-over-time options from well-established legacy institutions receive the highest customer satisfaction scores, largely because consumers tend to prefer financial products and services from banks they know and trust, along with the enhanced security and protection these institutions provide.

For years, BNPL was the wild card that regulators and financial institutions struggled to pin down. 

But now banks are shifting gears — from skeptics to players in the BNPL area, a transformation that’s been picking up steam across the industry in Q1 2025. But they’re not just stepping in to rein it back; they’re walking a fine line — extending a handshake while keeping the other hand still in the game of competition.