Originally posted on forbes.com

Point-of-sale lending is the next trillion-dollar payments category, and everyone wants in. We have seen the success and market appetite for buy now, pay later (BNPL) in Europe and Australia, but it wasn’t until the pandemic that U.S. consumers really started taking to the offers of Affirm and Klarna — at least not to the extent that we have been seeing over the past year.

However, all is not rosy on the horizon for these new providers. There are some legitimate questions around the sustainability of their business models and revenue growth at scale. For example, BNPL providers are typically backed by one underwriting bank and must integrate merchant by merchant, making it a heavy lift to expand their customer base. That aside, financial institutions are sitting up and paying close attention, especially credit card issuers that have seen real erosion in customers and volumes. These traditional banks were already seeing a trend from younger generations favoring a move away from credit to debit. With both consumers and merchants seeing the value of BNPL options, the challenge is only growing for traditional credit card issuers.

While issuers are sweating over what this means for their bottom line, I see a number of great opportunities for BNPL to leverage credit card rails. Take, for example, Zilch, the first BNPL card offering that consumers can use just like any other Mastercard. The biggest upside of this model, in my opinion, is that there’s no need for merchants to adapt their POS experience and, therefore, allows customers to take advantage of BNPL wherever they’re shopping.

Zilch and Mastercard aren’t the only ones exploring this path either. American Express has launched its Pay It Plan It program (which is a revamped version of a product they have had for years). And at my company, we’ve worked with a number of issuers and fintechs to enable solutions across several industries from retail to healthcare.

But it doesn’t stop there. While bypassing the need for merchant integration is a huge upside to BNPL on credit card rails, issuers looking to jump on the bandwagon have a whole other demographic to consider: businesses.

As credit card acceptance has skyrocketed for B2B payments, businesses are getting savvy with their cash flow. For example, some of the interest we see from businesses using our virtual card solutions is motivated by the desire to shift more spending to their credit cards, enabling them to prolong their payment cycles and reserve cash in interest-bearing accounts. A BNPL solution can offer the same benefits consumers love to the commercial sector.

One plausible reason for BNPL not yet reaching the commercial sector is the sheer complexity of business payments. The volume, reporting and distribution needs for a company are far more multi-faceted than managing personal finances. Today, the commercial payments space is racing to match the level of innovation proven successful with consumers. Banks are seeing business customers move away from long-standing relationships in favor of alternative card solutions that offer modern features for things like spend management.

But as more banks and fintechs partner to close this technology gap, I believe businesses will see more and more solutions geared toward their specialized needs coming from the banks they trust. The opportunity that BNPL offers for banks and their customers will no doubt foster new models for managing business payments with the benefits of prolonged billing cycles and control over cash flow.

While players like Affirm and Klarna have established category leadership, there is still plenty of room for growth. As BNPL is expected to quadruple by 2025, according to Jim Marous, co-publisher of The Financial Brand, we are still very much in the infancy of exploring the opportunities beyond retail. What I am most interested in seeing is how established issuers forge new fintech partnerships to address the BNPL opportunity and the clever new business models that will arise across existing payment rails.