5 payments innovations designed to counter inflation

After watching fintechs propel the buy now/pay later craze over the past few years, traditional credit card issuers are driving innovations of their own with new options tailored to the tightening economy.

Credit card balances notched their steepest one-year climb ever during the first quarter, underscoring consumer demand for flexible purchasing and repayments amid ongoing inflation and rising interest rates.

The newest products include zero-interest credit cards, tools to divide purchases among multiple credit and debit accounts, and the opportunity to earn cash-back rewards on secured-card purchases. Here are five examples.

TD Bank

TD Clear

In May, TD Bank launched TD Clear, which the bank claims is the industry's first traditional credit card that's interest-free. Instead, it charges consumers a flat monthly fee.

The product from Cherry Hill, New Jersey-based TD unit aims to simplify the terms of revolving credit with a consistent monthly fee of $10 to access a $1,000 credit line, and $20 for a $2,000 credit line. Consumers must pay the fee whether or not they access the credit, but there are no late fees. For example, at the end of each billing cycle customers must pay a set minimum $35 for $1,000 credit used, plus the $10 monthly fee.

TD reports all card account data to the credit bureaus monthly, and consumers who fail to pay eventually will be sent to collections.

A second new TD credit card, TD FlexPay, also gives cash-strapped consumers some relief with the option to skip a payment once a year. TD FlexPay customers also get their first late fee refunded every 12 billing cycles, in a nod to pushback on high credit card late fees. The Consumer Financial Protection Bureau recently proposed slashing credit card let fees, which are around $29 each, to as low as $8.
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Sam Miller, CEO of Kasheesh

Kasheesh

Most consumers have at least four payment cards in their wallet, but when making a purchase many aren't sure of their ever-changing credit limits. Kasheesh solves the problem in real time by displaying a user's spending power by combining up to five of their cards.

Using technology from Plaid to instantly assess a consumer's total bank-account funds and available credit, Kasheesh's AI-powered engine recommends the most effective way to make a purchase using any combination of credit, debit and gift cards. Kasheesh's wallet can store up to 20 cards that users may rotate for purchases.

CEO Sam Miller said he conceived Kasheesh as a way for consumers to responsibly build a credit score, while preventing overdrafts. Kasheesh also suggests when it's wiser to wait until payday to make a purchase. 

Kasheesh, which uses Stripe to connect to merchants, plans to soon add a feature enabling groups to responsibly pool their funds for shared purchases or trips.
Mastercard with thumb

SuperCash Mastercard

Super.com in recent years has created one of the few secured credit cards that enables users to earn cash-back rewards for daily spending with the SuperCash Mastercard.

Launched last year, the SuperCash Mastercard bills itself as a cross between a credit card and a debit card. Although it's classified as a secured card, consumers have wide flexibility in funding the card and SuperCash also pumps out more rewards than the typical secured card. 

To get started, users must open a SuperCash deposit account and transfer funds from an external bank account, Venmo, PayPal or CashApp. There is no minimum deposit requirement, and the user's available credit exactly matches the amount stored in the SuperCash account, with a daily spending limit of $1,000 and deposit maximum of up to $5,000 per month. 

Rewards include 10% cash back on travel booked through Super.com, 5% cash back on goods purchased through Super.com merchant partners and 2% cash back on all other purchases. When a transaction is completed, the associated rewards appear in the app's virtual wallet, with the option to spend or transfer to another account. 

The card's issuer is MRV Banks, a community bank founded in 2007 with $671,000 of assets, based in Sainte Genevieve, Missouri.

Toronto-based Super.com, which has U.S. offices in San Francisco, last month announced an $85 million Series C investment to build its platform. Previously called Snapcommerce, the firm launched in 2017 with a chatbot-powered mobile shopping tool focused on travel. Last year the company rebranded, and it now has more than five million users.
Citi sign

Citi Pay Credit

Citigroup recently dove into an expansion of its digital consumer finance options, targeting customers new to Citi along with existing credit card customers. In May, the bank introduced Citi Pay Credit, its first point-of-sale financing product from its Citi Pay brand. The digital credit service, distinct from its credit cards, offers instant promotional financing options for large-ticket purchases through participating merchants. Later this year, Citi plans to add installment-loan financing through this channel, with terms ranging from six to 60 months. 

In April, Citi worked with Amazon.com to make its Citi Flex Pay installment loans available for the first time through a digital wallet. Citi Flex Pay, available to existing credit card customers, was introduced in 2020. Now as a checkout option within the Amazon Pay digital wallet, it gives users a one-click approach to making installment-loan purchases from thousands of e-commerce merchants that support Amazon Pay.  

These products streamline Citi's various instant financing models through diverse channels, covering a broad spectrum of merchants from those selling large-ticket items like furniture down to online purchases as small as $50.
jewelry store

Acima Leasing

The rent-to-own industry saw a surge of growth during the pandemic when consumers began to experience uneven cash flow. One of the rising players in this niche is 10-year-old Acima Leasing, based in Plano, Texas, which offers instant financing for items like jewelry and electronics at more than 15,000 merchants in the U.S., Mexico and Puerto Rico, both in stores and online. In 2021, Acima launched a mobile app which significantly expanded its reach.

The service operates as an alternative to BNPL loans through a leasing arrangement with the option to cancel the deal at any time, without penalty. 

Acima enables customers to instantly lease hard goods including mattresses, appliances, electronics, tires, eyewear and diamonds, including a leasing fee that varies by item in the total cost. Unlike popular BNPL lenders, Acima specifically excludes soft-goods items like apparel.

Acima customers apply online or in stores to get approved before making purchases on eligible items valued from $300 to $4,000, through a soft-pull credit check that considers applicants' bank account and income data. Customers can opt to pay for purchases over 12, 18 or 24 months, or they may pay off the balance in full at any time. Customers who pay off their leased purchase within 90 days pay a "purchase fee" of $25 above the original cost of the item.

One founder of Acima, now owned by Upboard Group, is Jason Hogg, son of former Mastercard CEO Russell Hogg, who worked for the card network until 1988. Jason Hogg previously founded Revolution Money, which American Express acquired in 2009, harnessing its technology to develop American Express Serve and the Walmart Bluebird platform. Hogg spent nearly six years at Amex as president of American Express Enterprise Growth, before moving on to roles at various private-equity firms. Hogg continues as Acima's executive vice president while serving as executive-in-residence at private-equity firm Great Hill Partners. 
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