Marqeta has published research suggesting UK consumers and small businesses are using a broader mix of credit and payment products, with traditional single-product lending models losing ground.
The report is based on a survey of 4,000 consumers and 1,000 small and medium-sized businesses in the UK and the US. It points to more frequent switching between credit cards, debit cards and Buy Now, Pay Later products. In the UK, half of the surveyed credit card holders said they carry more than one card, while 85% of consumers said they choose payment methods on a transaction-by-transaction basis.
Among small businesses, the shift appeared even more pronounced. Marqeta found that 96% of SMBs switch payment methods regularly, typically three to 10 times a month, to manage cash flow and access finance.
The figures suggest consumers are not abandoning older forms of borrowing as much as combining them with newer ones. Of those who use Buy Now, Pay Later, 79% said they also use credit cards rather than treating the product as a substitute.
The same pattern was evident among people without a credit card. Nearly a quarter of respondents said they turn to Buy Now, Pay Later when they cannot pay in full, using instalment finance instead of revolving credit.
Changing habits
The study points to a more fragmented market, with borrowers assembling their own mix of financial tools depending on purchase size, cash position and product availability. It also suggests lenders may be slow to respond as customers move beyond the standard credit card model.
Among people whose credit card applications were declined, 63% were not offered an alternative product, even though 60% said they would consider one. At the same time, 76% of rejected applicants said they would be willing to undergo a credit check later to move on to revolving credit when eligible.
The report also identified interest in so-called flexible credentials: single cards that switch between debit, credit and Buy Now, Pay Later at the point of purchase. Among consumers aged 18 to 44, 48% expressed interest in such products.
Interest was stronger among people already managing several cards. Of consumers interested in flexible credentials, 67% said such a product would replace their current debit card, and 71% said it would replace their current credit card.
For small businesses, the appetite for more adaptable financial tools was also high. Among SMBs planning to apply for a credit card, 82% said they were interested in flexible credentials, and 89% cited interest in flexible repayment terms.
Non-bank opening
The findings also indicate that customers are willing to consider providers outside traditional banking. More than half of surveyed consumers said they trust established fintechs for financial services, while 47% said they trust large retailers and 45% said they trust Buy Now, Pay Later providers.
Among SMBs, 66% said they were comfortable using financial services from non-banks. That rose to 83% among businesses planning to apply for a credit card.
Consumers most interested in flexible credentials were also more open to non-bank providers. Marqeta found that 52% of that group were comfortable with non-banks, compared with 25% of those not interested in such products.
This, Marqeta argues, creates room for fintechs, retailers and other providers to compete more directly for customers whose borrowing needs change over time. The report suggests many existing products do not adapt as people move between limited credit access, mainstream cards and other forms of short-term finance.
Co-branded debit products linked to instalment finance were highlighted as another area of interest. Marqeta found that 33% of consumers expressed interest in co-brand debit cards, rising to 41% among those aged 18 to 44.
The data also pointed to marketing potential where Buy Now, Pay Later is paired with incentives. Among consumers who had previously been neutral, 65% moved into consideration, while 35% of those previously uninterested also shifted into consideration.
Todd Pollak, Chief Revenue Officer at Marqeta, said the results reflected a broader change in how people and businesses approach borrowing.
"Credit is no longer a single product consumers and SMBs either have or don't have. It's become a portfolio of tools they are assembling themselves, often from multiple providers, because most providers don't offer the full range of products they need," Pollak said.
He said the same problem was visible in business finance, where firms can quickly outgrow entry-level borrowing products.
"The biggest gap in SMB financial services isn't product availability. It's that most products don't evolve as the business does," Pollak said. "SMBs outgrow their first credit card as their business evolves and expands, meaning suddenly the tools they have don't fit anymore. That's the problem Marqeta is focused on solving. We give platforms the infrastructure to meet SMBs where they are, and grow with them from there."