Why Mastercard bought Vyze | PYMNTS.com
Second thoughts – of course the wise recommend them, but they represent a defeat for retailers. Reluctance and further consideration can lead to fewer products in shopping carts, abandoned carts, and lost sales in the world of payments and commerce.
The trick is to get that consumer across the finish line (or through the door, or the fence, whichever cliché preferred), and not only make the sale, but also retain that buyer – and maybe. even be to get him to throw a few other things in those baskets along the way.
Point-of-sale (POS) financing can help achieve these goals, according to its supporters, including Blake Rosenthal, Executive Vice President of Acceptance Solutions at MasterCard. After the news broke Tuesday morning (April 16) as the payment card network acquired POS finance provider Vyze for an undisclosed fee, she spoke to Karen Webster of PYMNTS about the thinking behind the deal and how point-of-sale finance fits into the larger payments, commerce and the digital lives of consumers.
Growth in point-of-sale financing
Overall, POS funding represents a “significant and growing opportunity driven by giving consumers more choice” when it comes to payments, she told Webster – indeed, according to Accenture figure cited by Mastercard, the industry represents a $ 1.8 trillion opportunity. “It’s a big and growing [area], but it’s not very crowded now. There is a lot of white space, ”she said.
Securing a major presence in the point-of-sale finance space as early as possible was not the only motivating factor for Mastercard in purchasing Vyze. The company, Rosenthal explained, “complements the way we play in the ecosystem.” Vyze is not a lender, but rather a digital commerce and payments matchmaker, bringing lenders and merchants together and enabling them to offer installment loans to consumers purchasing products from these merchants. “If you’re a trader today, you might have connections with two or three lenders,” she said. “With Vyze, you connect with all the lenders on the platform.”
In short, this means relatively easy integration and immediate scalability for traders using the Vyze platform. Consumers and consumer spending, according to Rosenthal, will also benefit. Having so many lenders available to businesses through a single digital platform results in loan approval rates of “nearly 90%,” she said.
Vyze already works with major retailers and brands, such as Microsoft, Samsung, Home deposit, NordicTrack and many more, which means that major lending relationships are already in place, some of those loans coming from FinTech companies.
The POS Funding Push
The world of point-of-sale financing is booming – according to Rosenthal, the market is growing by around 20% per year.
Walmart is another recent example of this growth. It is in partnership with the POS loan company To affirm to help consumers finance purchases over $ 150 (but less than $ 2,000). Work with Walmart gives Affirm access to an incredibly large and diverse pool of consumers who want a different type of credit product.
POS funding is also spreading in the B2B world. As B2B commerce continues to embrace online channels, it is a natural progression for the industry to adopt Point of sale financing – with a similar vision of limiting cart abandonment rates and offering businesses a better online shopping experience. However, the B2B space, as PYMNTS has documented, can showcase its own unique challenges when it comes to this consumer loan method.
The Vyze process
So how does it work for consumers who use the Vyze platform?
A customer purchasing a product will find, at checkout, the POS finance option listed among other payment options, Rosenthal explained. The consumer who clicks on this option has to do a little more work – mainly, providing personal information such as name, address and social security number before that information is sent to lenders participating in the platform. Vyze. Lenders who have a relationship with this particular merchant will have a specific position in the process. The first lender, for example, can accept or deny a loan to that consumer, depending on their own criteria. If that loan is rejected, then the second lender gets the offer, and so on.
If a loan is approved and accepted by the consumer, then the relationship is formed between that consumer and the lender (and this is indeed a transaction without a credit card). This is not to say that the trader is completely out of the loop, however, and has no role in the loan or the terms of a loan.
According to Rosenthal, traders can subsidize and subsidize the costs of some loans to increase consumer spending, with some installment loans even offering zero percent interest. This can lead to less risk of cart abandonment and a mix of higher priced products in consumers’ shopping carts, she said.
There are more than a few aspects of the Vyze-Mastercard deal left to work out – the main one is how to score loan and loan offers, given the multiple players involved. However, Rosenthal said there is ample room for growth and what amounts to experimentation, especially when it comes to acquirers. Plus, there are “probably tons of synergies with the products we have.”
Regardless, the overall outlook for point-of-sale financing looks pretty bright at this point. After all, who wants to lose a sale because of consumers’ reluctance to know how to pay for it?