The news: Mastercard added H&R Block, i2c, Walgreens, and other partners to Mastercard Installments, the buy now, pay later (BNPL) program it announced in September, per a press release.

Here’s how it works: Mastercard Installments lets the card network’s merchants offer BNPL options—including pay-in-four interest-free installment plans—through a direct integration into their platforms.

Customers can apply at the point-of-sale (POS) or with banks, lenders, and other financial institutions (FIs) like Synchrony and SoFi. They can get instantly approved at checkout or be pre-approved through their lender’s or FI’s mobile app, which can then be stored in their digital wallets and used wherever Mastercard is accepted.

Mastercard’s benefit: Two factors give Mastercard Installments a strong edge in the BNPL space.

• Mastercard can rely on its vast reach to scale its BNPL program and drive volume. The card network has 78 million merchants in its acceptance network, per PYMNTS. The program’s simple integration may be a key selling point for merchants since it lets them rely on their existing relationship with Mastercard instead of forging deals with BNPL firms.
• It's well-positioned to weather anticipated BNPL regulation. The Consumer Financial Protection Bureau (CFPB) could update its regulations shortly after the deadline for receiving public comment on BNPL closes on March 25, consumer advocacy firm PIRG told American Banker. Mastercard’s underwriting capabilities and tie-ups with established banks could give its installments solution a leg up on other BNPL providers that may have less room to pivot to accommodate new regulations.

The bigger picture: The number of US BNPL users is expected to grow 31.4% year over year (YoY) to hit 59.3 million in 2022, per Insider Intelligence forecasts.

Players like Affirm, Afterpay, and Klarna have dominated the space, but that may change as payments titans like Mastercard and Visa quickly build out their own BNPL programs. Even though these providers can use Mastercard Installments to access Mastercard’s payments rails and scale merchant acceptance, the card network’s presence increases competitive pressures by making it harder to stand out. This may be why BNPL incumbents are exploring sectors like healthcare and offering more traditional banking solutions to diversify their business lines.