Impact Story: Buy Now, Pay Later Provider Supercharges Growth and Reduces Fraud Losses by $9M with Socure

With the holiday shopping season in full swing, more consumers than ever are turning to the “Buy Now, Pay Later” (BNPL) option at checkout. According to Adobe, about $18.5 billion in holiday purchases are expected to be made using BNPL — up 11% from 2023.

Once a niche offering, “Buy Now, Pay Later” (BNPL) services have evolved to become a cornerstone of consumer purchasing power.

The appeal is clear: providers typically perform only a soft credit check, which won’t affect the shopper’s credit score, and many offer interest-free payment plans or very low rates for qualified purchases.

This combination of accessibility and favorable terms has particularly resonated with Millennials and Gen Z consumers, who actively seek alternative payment options that align with their financial preferences. Beyond the attractive financing terms, BNPL’s rise has been fueled by its seamless convenience and ability to meet evolving consumer expectations for flexible payment solutions.

But this rapid growth presents a double-edged sword for the BNPL providers behind these services.

While the market expands, providers face increasing pressure to auto-approve more customers at scale, attract merchants, and simultaneously combat increasingly sophisticated fraud schemes.

A BNPL Provider at a Crossroads

Amidst this booming market, one emerging BNPL provider found itself at a critical juncture, grappling with a less than ideal customer experience and unsustainable losses due to fraud and payment defaults.

The company faced significant challenges with First-Party Fraud — a particularly insidious form where customers use their own identity to commit fraud, such as purchasing a product and claiming it never arrived, or opening a false credit or debit card dispute.

The provider needed a comprehensive solution that could prevent fraud without creating friction for legitimate users, improve operational efficiency for their fraud team, and allow them to scale their business while reducing loss rates. This complex set of requirements led them to partner with Socure and implement its new account onboarding verification solution.

Socure’s Impact: A Dramatic Turnaround with $9M Saved in Fraud Losses

The implementation of Socure’s solutions led to a dramatic improvement across multiple fronts, resulting in a remarkable 22% decrease in overall fraud losses. This reduction translated to a staggering $9 million saved in fraud losses, a figure that underscores the significant financial impact of effective fraud prevention in the BNPL space.

One of the most striking improvements came in the realm of First Payment Defaults. Socure was able to identify 44% of the individuals with payments defaults within its First-Party Fraud consortium, and was able to reduce 19% of all payment default associated losses while increasing approval rates. This not only represented a substantial financial saving but also a significant reduction in the operational burden associated with managing defaults.

Operational Efficiency: Streamlining Processes

Beyond the direct fraud reductions, Socure’s solutions drove substantial improvements in operational efficiency. The number of fraud investigations dropped by 38%, allowing the BNPL provider to save its fraud team time and offer faster onboarding for legitimate users, enhancing the overall customer experience.

Socure’s First-Party Fraud Consortium Identifies Potential Risk

Socure’s First-Party Fraud (FPF) consortium proved to be a powerful tool in identifying risky accounts. 36% of the BNPL provider’s overall applicants were identified in at least one other institution within Socure’s FPF consortium.

This data sharing within the consortium allowed the BNPL provider to proactively identify risky accounts and minimize early payment defaults. It effectively connected the dots across organizations, rooting out difficult-to-spot fraud patterns. Notably, about 10% of first payment defaults were found to have at least one account closed by another institution, providing a crucial red flag for potential fraudulent activity. With this information in hand, the provider has a more complete view of potential user risk.

Securing the Future of BNPL

By implementing Socure’s solutions, the provider was able to dramatically reduce fraud losses while simultaneously improving operational efficiency. This dual benefit allowed them to protect their bottom line, scale their business confidently, and ensure a smooth experience for legitimate customers.

As the BNPL market continues its explosive growth, solutions like Socure’s will be crucial for providers looking to thrive in this competitive landscape.

The ability to offer frictionless experiences to good customers while effectively combating fraud will be a key differentiator in the evolving financial services ecosystem.

To learn more about the growing problem of first-party fraud, download our report here.