U.S. Bank has introduced a tool that lets businesses offer consumer financing at point-of-sale.
The lender’s Avvance offering, announced Tuesday (Oct. 24) is an “embedded, multi-channel point-of-sale lending solution” for businesses. According to a news release, Avvance lets shoppers pay over time with personalized loan options available during checkout.
“Consumers like the certainty of knowing their payment amount and terms at the time of sale, with easy and instant access to credit,” said Mia Huntington, executive vice president of buy now, pay later and point-of-sale lending at U.S. Bank and Elavon.
“With Avvance, business owners have the ability to attract new customers while increasing their buying power, resulting in increased sales,” Huntington said.
She added that Avvance lets merchants offer financing while getting full payment at the time of sale without having to worry about chasing down repayments.
Avvance is launching at a time when, as PYMNTS Karen Webster wrote this week, the term “buy now pay later (BNPL) is having its “Kleenex moment.”
That is, just as Kleenex started as a name brand but has evolved into a generic term for facial tissue, BNPL has become a payments sector shorthand for any online point-of-sale credit product that splits purchases into smaller, equal payments over a set term to pay in full for a purchase.
Consumers do it as well, Webster noted. Most use BNPL to describe any of the variety of split payment offerings from merchants, card issuers and FinTechs.
“That’s not wrong, but it does speak to the challenges of parsing data precisely to understand what split-pay options consumers are using to, well, buy now and pay later — and why,” Webster wrote. “Maybe it’s time for a new split-pay credit taxonomy.”
PYMNTS intelligence shows that in the last year, roughly 60% of American consumers used an online point-of-sale payment option that divided a retail purchase into equal installments over a set term.
For 37%, that meant getting a new loan from a FinTech, while an equal share did the same but from a merchant to purchase something at a specific store. Most of the time, these split-pay programs had zero percent interest.
“Forty five percent of consumers used a split-pay point-of-sale option attached to their network-branded credit card, using their already approved and unused credit line to make the purchase,” wrote Webster. “Over the last several years, more card issuers have offered these options. Most card issuer-centric plans are set up after the purchase is made via the issuer’s site or app.”