Research has shown that amid the digital shift, millennials, Gen Zers and other consumer groups are ready to start building their credit – and they want help doing it. That’s where Sezzle comes in. “Combined with the paradigm shift toward consumers using BNPL companies, there’s a great opportunity to transform this viable market dynamic by becoming their financial co-pilot and moving them from “credit skeptics” to “credit builders,” says CEO Charlie Youakim in this excerpt from The Connected Economy’s Power Source – CEO Edition.
There’s no denying that the digital transformation of payment systems is here and moving rapidly. Several factors have contributed to this phenomenon: a record number of merchants and consumers embracing online payment systems and the buy now, pay later (BNPL) philosophy of better payment management; the impact of the COVID-19 pandemic and how it has changed payment behaviors; and the desire for consumers, especially younger ones, to build and boost their credit ratings without necessarily owning a credit card.
The payments industry now has the opportunity to harness these trends and transform the landscape. Shoppers of all ages want to feel empowered when it comes to building credit and improving their scores, while having the financial freedom to pay for their purchases in installments. The pandemic has allowed them the time to invest more energy in their financial futures, and they have shown interest in being more educated as they actively build their credit portfolios. Payment companies need to be ready to embrace this potentially game-changing shift in consumers’ financial habits.
A recent study showed that 65 percent of millennials and 50 percent of Generation Z consumers don’t have a credit card, and those who do have a 31 percent utilization rate. Despite those trends, surveys show that many members of those groups (as well as those in all consumer groups) say they want to build their credit scores and buying power, and are looking for education and assistance to help them with their goals.
That’s where Sezzle comes in. Combined with the paradigm shift toward consumers using BNPL companies, there’s a great opportunity to transform this viable market dynamic by becoming their financial co-pilot and moving them from “credit skeptics” to “credit builders.” Sezzle accomplishes this through “Sezzle Up,” which is designed to put users on a path to credit by offering continued financial education on a “graduated” scale to help them boost their credit scores while building a bridge to the ever-growing online merchant networks. The more educated a consumer is, the better positioned they will be to make their payments on time. This will increase their credit scores and make them valued investments for both payment companies and retailers.
If payment companies engage customers and actively guide their credit journeys, including those with low credit scores (think of them as potential “prime to be” buyers instead of “subprime”), those customers will become loyal repeat users who will plan ahead to make their payments on time and improve their scores. Sezzle has embraced this approach.
Of course, this “credit builders” strategy, in turn, boosts the bottom line, expands the user base and positively positions those companies that invest in their customers as ones who care about them for the long term – a truly transformational win-win for consumers, merchants and the payments industry as a whole.
Selected by EFXA