Home Insurance Synchrony’s new ‘Pay in 4’ loan borrows from buy now/pay later upstarts

Synchrony’s new ‘Pay in 4’ loan borrows from buy now/pay later upstarts

Synchrony’s new ‘Pay in 4’ loan borrows from buy now/pay later upstarts


With credit cards facing fresh competition from buy now/pay later products, Synchrony Financial is planning to launch a short-term installment loan of its own.

Starting in October, Synchrony’s retail partners will be able to choose whether to offer the new loan option as part of their credit card and financing programs. Doing so will enable customers to make purchases, typically of less than $500, through an interest-free loan that they can pay back in four installments.

“There’s clearly a consumer demand for that product, and our partners want to offer that product,” Synchrony CEO Brian Doubles said Thursday at the company’s virtual investor day event.

Synchrony CEO Brian Doubles said at an investor event Thursday that while some of the company’s retail partners will want to “dive both feet in,” others will take a more cautious approach to buy now/pay later loans.

Anthony Collins Photography 2018

Synchrony’s announcement comes amid a boom in BNPL financing, as firms like Affirm, Klarna and Afterpay, which Square has agreed to buy for $29 billion, bill their installment loans as an easier-to-understand alternative to credit cards.

Stamford, Connecticut-based Synchrony partners on cards with a wide swath of retailers, including Lowe’s, Crate & Barrel, Sam’s Club, Verizon and Walgreens.

One of Synchrony’s card partners, Amazon, made a splash last month by announcing a partnership with Affirm. Amazon is currently testing Affirm’s product with a limited number of customers, but over time Affirm’s BNPL product could erode the revenues that Synchrony generates from its own partnership with the e-commerce giant.

Synchrony also offers consumer credit in partnership with San Jose, California-based PayPal, which is a leader in the BNPL market.

As investors have focused on how the growing popularity of BNPL products could impact the credit card industry, some major card issuers have responded by introducing installment loan options.

Synchrony, which is nearly 90 years old and originally offered financing for purchases of General Electric appliances, is no stranger to consumer installment loans. The $92 billion-asset lender currently offers installment options through both its credit cards and a product called SetPay, which lets shoppers split major purchases into loans that range from three months to seven years.

The company decided to add a “Pay in 4” option after evaluating the competitive landscape and talking to its partners and customers, Michael Bopp, Synchrony’s chief growth officer, said at the company’s investor day event.

Unlike some BNPL providers, Synchrony will not charge late fees to customers who miss payments, according to a company spokesperson.

Synchrony’s competitive advantage is the “broad set of products” that it can offer to merchants, according to Bopp. He gave the example of a new customer who buys a product with a buy now/pay later loan and subsequently decides to open a credit card to make repeat purchases.

Synchrony is also billing its four-payment loan option as a cheaper alternative for merchants than the offerings from other BNPL companies. As retailers try to drive more online shopping, they often accept smaller margins on BNPL purchases than they would receive on credit card transactions.

While Synchrony’s retail partners have expressed interest in BNPL, they are also “really being thoughtful about the economics” and ensuring that they don’t part ways with additional revenue, Doubles said.

Some of Synchrony’s partners will want to “dive both feet in” and offer BNPL loans quickly, but others may take a more cautious approach, he said.


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