As
Accrue Savings, a fintech that enables shoppers to open an online savings account through a merchant, and then earn rewards while saving up for a big-ticket purchase, says travel is becoming one of its top product categories.
The New York-based firm
"At least one-third of Americans are saving up for a trip, and as travel costs continue to rise, people are looking for alternative ways to finance these expenses," said Hershfield.
BNPL loans are popular for travel purchases, too. One in 10 consumers has paid for travel using a BNPL loan, according to
After more than a year in business, travel stands out as one of the fastest-growing categories for Accrue Savings because of persistently elevated prices for flights, cruises and hotel stays, according to Hershfield. At least two other startups using a similar save now, pay later model — Austria-based Monkee and Malaysia-based Sugar — also primarily target travelers.
Consumers also use Accrue's service to pay for expensive jewelry and furniture, but Hershfield bets travel will continue to be the platform's top use case for the foreseeable future.
"Almost all consumers tend to earmark and save up money for trips. We give them a way to earn rewards for specific trips as they wait to accumulate the funds," he said.
Consumers enroll with Accrue Savings by clicking on a button on a participating merchant's website, and choosing how much they want to contribute toward a future purchase, from $1 a week up to $100 a day. Users may invite friends and family to contribute to their Accrue Savings account; users may also skip payments or put the plan on hold.
Merchants offer Accrue users rewards that operate as a discount on up to 20% off of the purchase price. When the account has enough money to make a purchase, the user clicks a button and instantly receives a virtual Visa debit card, which can be used to purchase the item through the retailer's site. The $3.1 billion-asset Blue Ridge Bankshares, based in Charlottesville, Virginia, issues Accrue's virtual Visa card; New York-based embedded-finance technology provider Unit also provides support.
If a shopper decides to cancel the plan, Accrue returns the saved funds to their linked bank account with no rewards or interest.
"Customers can apply their saved funds to a specific item or something else on the retailer's site," he said.
Accrue earns revenue through interchange when the Visa card is used to pay merchants, and merchants separately pay Accrue a fee of about 1% of each item's purchase price, Hershfield said. Accrue has raised $30 million in venture capital funding to date.
One criticism of the "save now, buy later" system is that it cuts against retailers' perennial eagerness to close sales immediately. But Hershfield counters that Accrue's longer-term approach provides merchants with other benefits.
"The savings process creates loyal relationships between consumers and merchants, who can send reminders to Accrue customers or notifications marking milestones as they save up for their purchase," he said.
In a tight economy, Accrue's model could have some advantages over traditional BNPL loans, said Ariana-Michele Moore, an advisor in Datos Insights' retail banking and payments practice.
"I worry that traditional BNPL loans can lead to irresponsible behavior or create costly confusion among consumers," Moore said, reiterating concerns raised by the
Use of Accrue would significantly reduce risk to merchants and could offer them some accounting benefits if merchants were to get creative with lowest-price guarantees and other deals to hook consumers, she said.
Datos Insights' research suggests fewer than half of consumers with bank accounts are likely to finance big-ticket purchases with a credit card, so Accrue could potentially expand merchants' reach to certain customers for those types of sales.
"But consumers like instant gratification," Moore noted, underscoring another inherent issue in Accrue's long-haul approach to shopping.
Hershfield claims Accrue's fees are significantly lower than BNPL platforms' merchant fees — reported to be about 3% to 6% of the purchase price — even when accounting for rewards-based discounts paid to shoppers.
"Most retailers are spending 20% of every average order value to market to that customer and close the deal," he said.
While many merchants avoid adding checkout options that interfere with existing website design and checkout flow, Hershfield said integrating Accrue is a lightweight API-based maneuver that takes less than 20 minutes for an online merchant to add.
"The most time-consuming part of the process for merchants is deciding what deal or reward they want to offer consumers," Hershfield said.
