What Mastercard’s New ‘Buy Now, Pay Later’ Feature Means for Cardholders

With its new Mastercard Installments program, the Mastercard payment network is adding to the growing number of ways consumers can use buy now, pay later (aka BNPL) when making purchases.

Mastercard Installments — which the company says is “coming soon” — will pair with specific card issuers to offer payment plans you can use in stores or online wherever Mastercard is accepted. But there are limitations to know about, as well as some features that differentiate this program from other BNPL options.

How does the Mastercard Installments program work?

Instead of paying for a purchase in full, or taking on credit card debt to pay it back over time, Mastercard Installments allows you to opt in to a payment plan through an eligible credit, debit or prepaid card from a participating bank. Payment plans can vary, including options such as the ability to make four equal payments at 0% interest, or to pay down a balance with interest over a longer term.

There are several ways to compare and opt in to payment plans:

  • Instant approval at checkout: This allows you to choose a payment plan at the moment of purchase, in stores or online.
  • Preapproval for a future purchase: Access a BNPL offer and store it in your digital wallet to use later.

Nerdy tip: Mastercard processes card payments, but it does not issue credit cards. A card that has “Mastercard” printed on it runs on that payment network, but the actual account is with a lending bank.

Can I use any Mastercard?

No. For now, Mastercard is partnering with specific credit, debit and prepaid card issuers, including:

  • Barclays US.
  • Fifth Third.
  • FIS.
  • Galileo.
  • Huntington.
  • Marqeta.
  • SoFi.
  • Synchrony.

How is Mastercard Installments different from existing BNPL options like Affirm, Afterpay and Klarna?

Companies like Affirm, Afterpay and Klarna partner with specific merchants. This means you can use them for purchases only at those merchants. Mastercard Installments can be used wherever Mastercard is accepted, provided you have an eligible card.

Mastercard Installments offers zero liability fraud protection, meaning you won’t be on the hook for the cost of any fraudulent transactions. You can also dispute charges directly through Mastercard.

Note that other BNPL services offer help in the event of fraud, too. You may be instructed to dispute the purchase with the BNPL service itself, or with the bank that issued the card tied to the BNPL service. However, if you need to dispute a charge and the merchant doesn’t resolve that dispute in your favor, you may still be responsible for making payments to the BNPL service, depending on its terms.

What about similar services offered by major credit card issuers?

Increasingly, credit card issuers are beginning to offer comparable payment plan features, along with other ways to access your credit line beyond expensive cash advances.

Offerings such as AmEx Plan It® and My Chase Plan let you divide up qualifying card transactions over a fixed period of time, post-purchase. With these programs, you’d still earn rewards as you would for other purchases (assuming your card earns rewards in the first place). Terms and fees may apply.

However, these kinds of services are designed to be used with credit cards specifically. Mastercard Installments can be used with credit cards, but also with eligible debit and prepaid cards.

Will I still earn credit card rewards for purchases through Mastercard Installments?

According to a Mastercard representative, this depends on your card issuer’s policies. Mastercard Installments functions separately from your existing cards’ rewards programs.

If you have a large purchase coming up and are hoping to both earn rewards and split the purchase into smaller payments, check with your card issuer first to see whether that’s possible.

Will using Mastercard Installments affect my credit?

Again, it depends, as Mastercard says it’s up to the card issuer. A hard credit pull during the approval process could affect your credit. This is something to consider before fully committing to using Mastercard Installments, or any other payment plan.

Other third-party BNPL providers offer some payment plans that don’t involve a hard credit inquiry. Similar offers directly from major credit card issuers generally don’t require a hard pull either.