Looking to add a new twist on buy now, pay later loans, provider Splitit Payments Ltd. Tuesday announced a new BNPL-style loan that will leverage a consumer’s open-to-buy on their payment cards to pre-qualify them for an installment loan at the point-of-sale.
To qualify for the loan, merchants run a pre-authorization on a consumer’s credit card to verify the consumer has enough open-to-buy on her card to take out the loan. Qualified consumers are automatically charged the first installment on their card. Subsequent installments are pre-authorized each month to ensure the consumer has the available open-to-buy to cover the amount due, a Splitit spokesperson says.
Merchants can opt to receive payment in full at the time of purchase or receive payments monthly until the term of the loan is completed. Merchants opting to receive payment in full upfront pay a fee starting at 2.5% of the purchase amount per installment. Merchants receiving payment on an installment plan pay 1.5% of the purchase, plus $1.50 per installment, according to the company.
Splitit’s application programming interface can be embedded into existing acquirers’ platforms and current checkout flow, allowing merchants to continue using their current processor for Splitit transactions.
As part of the rollout, Splitit is partnering with OCM (On Campus Marketing), a merchant for dorm-room necessities, to offer the service to college students, their parents, and college faculty and staff. OCM provides e-commerce solutions to more than 900 college campuses and 1,500 campus organizations.
“Splitit is not a payment method. We are not an offers engine using harvested data or a super app in the making. We are a top-of-wallet service that empowers consumers, merchants, processors, networks, and issuers. We are the only installment platform to offer a unified global experience by utilizing existing payment rails,” Splitit chief executive Nandan Sheth says in a prepared statement. “The appeal of Splitit is that any consumer that has used their card to make a purchase will intuitively find our solution an easier way to pay.”
In related news, BNPL platform provider Zilch has officially launched in the United States with more than 150,000 pre-registered customers. Zilch is available at all Mastercard merchants.
Zilch’s platform uses a blend of open-banking technology, soft credit checks, and proprietary behavioral data to develop a real-time view of a consumer’s financial health. That data enables Zilch to create a 360-degree view of how big a credit line a consumer can qualify for so merchants can make accurate, individualized spending recommendations. Concurrently, Zilch is partnering with Experian to provide reciprocal reporting of payment plans to the credit bureau.
Since launching in the United Kingdom 18 months ago, Zilch has attracted more than 2 million customers. The company also raised $400 million in debt and equity from Goldman Sachs and investors, giving it a valuation of more than $2 billion at its last Series C funding round.
In yet more related news, Flexiti Financial, a Toronto-based provider of consumer-financing software at the point-of-sale, announced Tuesday the launch of its omni-channel customer-financing solution at all of Canadian retailer Michael Hill International Limited’s 85 locations in Canada. In addition, Flexiti will enable the retailer to offer its Canadian customers long-term credit options online and access Flexiti’s deferred-payment plans in store.
The partnership between Flexiti and Michael Hill also calls for Flexiti to acquire Michael Hill’s in-house Canadian credit receivables and existing store accounts for an estimated purchase price of $11 million Canadian ($8.55 million USD), with an effective date of May 31, 2022. Acquired accounts will be converted to Michael Hill FlexitiCard accounts and will be able to access Flexiti’s financing options at Michael Hill and in the Flexiti Network.