Member Exclusive, Payments

Payments Briefing: Does lease-to-own provide a “recession-proof” alternative to BNPL?

  • This week, we explore lease-to-own, an installment payment option that has been gaining popularity in recent months.
  • We also discuss SMBs' increasing reliance on cross-border payments, and the steps that providers can take to serve them better.
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Payments Briefing: Does lease-to-own provide a “recession-proof” alternative to BNPL?

As inflation continues at record levels and consumers seek out flexible options to pay for household items such as refrigerators, laptops, and furniture, alternative payment options like lease-to-own are growing in popularity.

This is particularly significant as BNPL – one of the most popular options in alternative credit in recent times – is facing strong headwinds due to rising interest rates, growing consumer debt, and slimmer profit margins, as well as shrinking investor confidence amid fears of a major recession.

In this climate, lease-to-own (LTO), a type of installment payment that has actually been around for decades, seems to be re-emerging as a potential solution for consumers seeking an alternative way to break up their purchases into manageable payments. While BNPL has lately been criticized for leaving subprime consumers with mounting debt, proponents of LTO say it provides these consumers with flexible payment options without indebting them. Some are referring to it as “BNPL’s recession-proof cousin”.

So, what exactly is LTO, and how does it function? In what ways is it similar to BNPL, and how do the two differ?


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