Consumer Finance

Bringing Financing Down To Size

Walmart credit card financing

Merchants and consumers alike have a host of reasons to love financing. Consumers get to purchase more or better than their cash budgets might have allowed, or get to hold on to their cash for longer. And merchants get a chance to both up their ticket size and win customers’ gratitude and loyalty.

Everybody wins.

That is, if the merchant is sufficiently large enough that it can either offer its own financing in-house or attract one of the major store-branded card players to collaborate on developing the offering. For smaller and medium-sized merchants, Blispay CEO Greg Lisiewski told Karen Webster in a recent conversation, the options out there just aren’t as well-developed.

“When we were thinking about entering retailer financing, there was a huge underserved population of merchants and consumers, because there were many many merchants that didn’t have access to financing programs. Either the cost wasn’t tolerable or the integration with legacy products wasn’t tolerable.”

And that underservice meant, in a sense, everyone lost out. Small to mid-sized merchants couldn’t offer an attractive program to convince conversion, consumers choices were constrained and they were forced into the arms of bigger retailers whether they wanted to be there or not.

“Let’s say you as a customer want a bike or a bridal dress — realistically, you might want to buy it locally. However, if you want to finance that product, you need to go to David’s Bridal or a big box store because they have the resources to work with the big banks so they can offer the consumer financing,” Lisiewski noted.

The market called out for a better product — and Lisiewski, in many ways, was the right person to build it, since he was part of the team that built Bill Me Later, which was later acquired by PayPal. What Bill Me Later was able to accomplish was remarkable, he noted — but as an online-only platform, it could only touch 10 percent of retail transactions at best.

“At Blispay, we started with the idea to level the playing field for mid-market merchants, regardless of channel — knowing that offline is still 90 percent of commerce. The plan [was] simple: make it easy for merchants to offer financing wherever they sell and for consumers to access it wherever they shop.

The plan was simple — making it happen, however … that was another story.

Making It Easy on Merchants

The first challenge Blispay confronted had to do with its payment network — and whether the company wanted to construct its own or build on top of something already existent.

“From my work at MBNA and Bill Me Later, I knew that building my own network is incredibly hard, slow work. More importantly was our belief that consumers want payments products that are relevant to them everyday, not just at one or two particular websites or stores. And they want it accepted everywhere now, not at some point in the future,” Lisiewski noted.

Plus, building that network is only half the battle — the merchant then has to find a way to get its POS plugged into that network, receive payments and integrate all that data.

“When there is a lot of product work that has to be done to get the system up and running, you will see even highly interested merchants having trouble. At Bill Me Later, we learned the integration is a real choke point for us.”

But it is a choke point that could be removed by building on top of the Visa network and making the entire consumer side of the process happen on a mobile phone instead of at the POS.

“The mobile phone is the way we acquire customers anywhere they are, because if they have mobile phones, they de facto have a computer everywhere — in the store, on the couch, in the car — wherever they may be. We get to tell our merchants they don’t have to do any integration; they just have to make the customers know they can get financing, refer them to our mobile site and we take it from there.”

Once the customer is approved for credit, the merchant processes it just like any other credit card payment from Visa.

Webster wondered how Visa feels about this, and if Blispay lines up with a direction that they had internally been pursuing.

“Visa is a big organization, so it’s hard to know everything they are doing. But they are excited we were innovating on their network instead of building an innovation directly next to it.”

Increasing Customer Options

Customers, he noted, don’t carry 10 store cards for love of plastic or thick wallets — they do so out of necessity, because different cards have different value propositions. Blispay wants to bundle those value props into a single focus — a financing and rewards program that rides on the Visa rails.

The big benefit for consumers, Lisiewski noted, is that consumers aren’t limited to financing at the merchant they opened the account with — they get a Visa card that can be used anywhere.

Blispay is the best of both worlds. It is a rewards program — users get 2 percent cashback on everyday spending purchases — and a financing program — purchases over $200 receive no payments, no interest financing for six months.

“We developed an account that can be used again and again every place they shop. We underwrite to credit worthiness instead of to a specific transaction.”

He told Webster that this portability is important, because customers themselves are portable and don’t want limits.

“Customers are pretty savvy and like to have options which they can control at any store. At Bill Me Later, we used to hear all the time, ‘I wish I could use it more places’ — for me, let’s not let our network be the limit. If I can open up the Visa network, I can satisfy this desire to have optionality anywhere customers shop.”

So what’s next?

According to Lisiewski, continuing to scale the business by growing its base of retail partners.

Things are off to a great start, with over 250 partners offering Blispay to their customers after just 12 months and customers having used it at 40,000 different retail locations.

The goal, the CEO noted, is to reach as many merchants — and through them, consumers — as possible.

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