U.S. Bank secures position in Buy Now, Pay Later sector
In a move to tap into the growing buy now, pay later (BNPL) market, U.S. Bank has launched a new point-of-sale lending product called Avvance. This innovative offering is designed to provide an alternative to opening a credit card and using it for cost-heavy, one-time purchases.
The development of Avvance began in December, and it's now ready for use on participating retailers' websites. At the checkout phase, customers can choose to pay with Avvance by inputting basic credit information. The service is private and confidential, ensuring a seamless shopping experience for users.
Andy Seidman, the leader of the Avvance team, brings a wealth of fintech experience to the project. Seidman has previously worked for Minneapolis-based BNPL provider Sezzle and a fintech company acquired by Ally Lending.
Seidman believes that the trend of BNPL usage among consumers is here to stay. He emphasizes the convenience of U.S. Bank's BNPL product, stating that it is an excellent product in the right circumstances. He also anticipates persistent demand from merchants for U.S. Bank's BNPL services, and he expects the trend to continue.
According to Bankrate, the average BNPL customer has four concurrent BNPL loans. Take-up rates for BNPL register across financial profiles, with 14.6% of those surveyed with an annual income above $150,000 and 24.3% with an annual income of under $30,000 using BNPL. The annual percentage rate for Avvance qualification depends on the term of the loan, which can range from three to 60 months.
U.S. Bank has the necessary infrastructure to offer its BNPL services in a way that differentiates it in the market. The bank has a merchant base, a lending business, and mobile app infrastructure to offer competitive BNPL services. However, as of now, there are no search results indicating which banks and merchants have acquired a license to offer the Avvance Point-of-Sale Lending product.
The Federal Reserve Bank of New York reported that 19% of consumers surveyed in June 2021 have used BNPL loans within the past year. With the launch of Avvance, U.S. Bank aims to capture a portion of this growing market and provide a viable alternative to credit cards for cost-heavy, one-time purchases.
Avvance is designed to be a one-time deal, allowing customers to control their spending. Seidman's team is developing Avvance with a focus on obtaining purchase licensing rights. The Avvance button will appear at checkout on participating retailers' websites, offering customers a convenient and private way to pay for their purchases.
In summary, U.S. Bank's entry into the BNPL market with its new product, Avvance, is a strategic move to capitalize on the growing popularity of BNPL as a payment option. With Andy Seidman's fintech expertise and U.S. Bank's robust infrastructure, Avvance is poised to become a viable alternative to credit cards for cost-heavy, one-time purchases.
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