Mastercard has moved into point-of-sale financing with the acquisition of Vyze, a FinTech firm the payment card network calls an “an end-to-end platform that facilitates financing options for merchants’ customers at checkout.”
Announced Tuesday morning (April 16), the deal gives Mastercard a new role in the alternative financing space. “Vyze’s platform connects merchants with multiple lenders, allowing them to offer their customers a wide range of credit options online and in-store and ultimately leading to financing approval rates up to 90 percent — well above the industry average,” Mastercard said in a statement. Point-of-sale (POS) financing stands as a $1.8 trillion opportunity, the company said, citing a figure from Accenture.
Via Vyze, merchants can connect with multiple lenders, which means those merchants’ customers can access credit options inside stores and online. “These financing options provide shoppers with additional payment flexibility at the exact moment of purchase, complementing Mastercard’s existing card and ACH-based solutions,” Mastercard said.
Among the main consumer segments targeted by POS financing providers are millennials, in part because they are being left out when it comes to tapping into home equity. As well, Bankrate has estimated that roughly 33 percent of millennials have cards. That leaves room to embrace other means of payment programs, among them installment payments, which typically carry no interest charges (but may carry late fees).
Mastercard is certainly not alone in the POS financing space.
The apparel company Cotton On last year began offering installments via Afterpay — 20 percent of consumers reportedly had utilized the installment feature, with “a remarkable uptake from millennial customers,” who spent $50 per order.
In more recent news, Affirm has partnered with Walmart to help finance purchases over $150 and capped at $2,000 — a pact admittedly not focused just on millennials, but on a broad swathe of consumers.
“Both consumers and businesses want the best choice and service, exactly when they need it,” said Blake Rosenthal, executive vice president of global acceptance at Mastercard. “Vyze adds to our ability to empower banks and other lending partners to participate in the growing trend of retail financing. The combination of their platform with our technology and network complements our existing payments programs.”
According to Mastercard, the end-to-end Vyze platform “allows lenders and merchants to integrate once and innovate forever through the simple use of APIs. Previously, managing and maintaining a range of consumer payment and financing options would require significant time and investment.” Vyze already works with several U.S. retailers. Terms of the deal were not disclosed.