By Ray Birch
TAMPA, Fla.—One credit union that has developed a customized buy now, pay later (BNPL) solution believes the path to real success is through attaching the program to debit.
“There's an increasing demand for financial flexibility from our members,” explained Richard Sellwood, SVP/COO at USF Federal Credit Union. “And that's really true of consumers across the country. They want more ways to be able to make purchases and finance smaller dollar amounts for a short period of time at a reasonable interest rate, and have some flexibility.”
The $1.1-billion USFFCU has partnered with BNPL platform equipifi to develop its offering.
“When a member makes a transaction with a debit card, if that particular transaction qualifies, they’re presented with an offer back to them,” Sellwood explained. “They don't have to take it, but the offer is made through our mobile app. We think this is incredibly convenient.”
The offer provides flexible repayment options based on the transaction amount—up to 18 months.
“You can then select the offer tab and see what repayment options you have, if you meet certain eligibility criteria.”
Sellwood said USSFCU rolled out the offering in June, noting early member interest has been good.
“We got out of the gate well with this,” Sellwood said, recalling how in the very early days the credit union saw 100 debit transactions being converted to BNPL. “Our membership seems to really like it. We've done some marketing around this, telling members to be on the lookout for the offer when making debit card purchases.”
‘In-Demand’ Offering
USFFCU’s BNPL offering, according to Sellwood, is an “in demand” payment alternative.
Richard Sellwood
“You see similar products in the marketplace—the Affirms and Klarnas—that offer similar solutions,” he said. “We just find the solution we have to be fair and better than those offerings. We conducted research with our membership to identify what other payments products they were using, and BNPL came out as one being overwhelmingly used by them.”
What separates USSFC’s offering from many other BNPL deals in the market, Sellwood said, is a low interest rate (17.9%) and that it’s offered after the debit transaction is made.
Why Debit?
Why did USFFCU, which serves the University of South Florida, tie the solution to debit?
“There is certainly a market for tying BNPL to credit. However, on the debit card side you have significantly more transactions happening,” Sellwood explained. “There's that much more opportunity.”
Sellwood added that the credit union is aware of the concern over mounting credit card balances among issuers across the nation, as well as to how consumers are paying more attention to growing credit card bills.
“Members today are just more cognizant of their spending. And, it's no secret that inflation is a big issue,” he said.
Keeping Members from Straying
By offering a BNPL solution, the credit union is also more likely to keep members from straying.
“Because they are going to use BNPL, that is clear in the data,” Sellwood said. “The first member who took advantage of our solution did so to pay for her child’s summer camp, allowing her to spread the expense over a few manageable payments and have more money available for everyday needs…It’s better they use the CU’s own product—and one that is better priced—than going to an outside provider.”