Upgrade gets a 'lift' from travel BNPL acquisition

Upgrade has made its first acquisition. 

On Thursday, the San Francisco company, which provides banking, payment and lending services to consumers in partnership with chartered banks, announced that it had purchased buy now/pay later company Uplift for $100 million. Upgrade currently provides point-of-sale financing for home improvements and auto purchases, while Uplift's niche lies in the travel industry: It partners with airlines, cruises, hotel chains, travel agencies and more in the U.S. and Canada to let people pay for their trips in installments. 

"This is really an expansion of our strategy into travel as another vertical," said Renaud Laplanche, co-founder and CEO at Upgrade, via email. "Travel is a significant area of financing and payments needs for our customers, so we believe there is a great opportunity to keep growing the distribution and user base. The Uplift infrastructure will help us add other verticals over time." 

Upgrade will also make the receivables available for purchase from its network of financial institutions. 

"Uplift's credit performance has been very good, as Uplift customers typically could afford to pay upfront," said Laplanche. "But they decide to take advantage of 0% financing offers, so they generally have the means to pay it back on time." Annual percentage rates range from 0% to 36%.

Uplift has 3.3 million customers, which Laplanche said would double Upgrade's customer base. Uplift users share similar demographics to Upgrade, including average credit scores of 700, income levels at around $100,000 per year and average age of 40. 

The Uplift team of 200 employees will be fully integrated, and Laplanche said he expects everyone to carry over. 

"We believe this combination will accelerate Uplift's ability to help consumers pay for their trips through simple and affordable monthly installments," said Tom Botts, chief commercial officer at Uplift, in a press release. "As part of Upgrade, more resources will be available to better serve our partners and customers."

When looking ahead to potential acquisitions in the future, Laplanche said Upgrade will look for a large mainstream customer base, significant distribution capabilities, and interesting products with adjacency to the company's existing products. 

"For every new business, we debate build versus buy," he said. "In this case, it would take us years to replicate the kind of distribution network with major airlines, cruise lines, hotels chains that Uplift has built over the last nine years, assuming we even could."