Mitch Ferro, CEO of Mastercard Vyze
Nearly every buyer has a love-hate relationship with their shopping carts. Although there is a long list of items on the wish list, a lot of hesitation and further deliberation only bring a few of those products into the basket for most buyers. Once they make up their minds and proceed to checkout, unfortunately, the next obstacle awaits for those looking to finance their basket—the lender potenitally declining the shopper’s finance request. This can lead to abandoned carts and lost sales. Creating a positive checkout experience for consumers is critical not just for sales but also to preserve the shopper’s loyalty.
According to various industry reports, 64 percent of consumers in the U.S. require point of sale (POS) financing wherever they shop, be it in-store, online, or mobile. Payment options like instantly approved loans and installment plans are becoming wildly popular, especially among millennials and Gen Z. In the wake of the pandemic, POS financing has become a growing trend for online purchases as shoppers get instant, personalized loans that allow them to purchase items in real-time and pay later. Merchants are boarding the POS financing bandwagon as it enables them to provide consumers with the best fit financing that allows them to buy what they want, at any time.
Despite the growing popularity of POS financing, this payment mode has its own set of roadblocks to overcome. Owing to the uncertainty caused by the current economic situation and the pandemic, lenders offering POS financing are stepping back to reassess their consumer underwriting criteria. Consequently, shoppers may be disappointed as they may be denied financing, forcing them to leave their purchase in the cart. At the same time, merchants may lose access to some customers due to the lack of wider options for financing, while lenders that may be willing to lend to these consumers lose prospective customers. As a renowned brand in the payments sector that is quite ahead of its time, Mastercard solves the challenges around financing for consumers, lenders, and merchants via its unique platform— Mastercard Vyze.
Mastercard, through its comprehensive platform, is pioneering an easier and unique approach to POS financing that helps merchants connect customers to credit options that best suit their financing requirements.
Boosting Consumer Loyalty
The innovative platform, Mastercard Vyze, brings together the three entities in a payments ecosystem— lenders, merchants, and consumers. Most merchants provide financing through one lender, limiting the merchant’s consumers to one lender’s underwriting criteria, and risking the possibility of consumers being denied financing support at the time of purchase. “With Mastercard Vyze, merchants can connect with multiple lenders on the platform and thus, reach out to more shoppers,” explains Mitch Ferro, CEO of Vyze at Mastercard. On the other end, in the traditional model, lenders miss out on opportunities to finance other potential consumers as their services are usually restricted to a certain segment of customers. To widen their reach and increase their accessibility, lenders are trying to be a part of the bigger picture provided by merchants to serve a larger section of consumers.
Ferro says, “Mastercard Vyze, through a feature known as waterfall decisioning, enables consumers to be matched to the best fit financing solutions according to their requirements.” Unlike traditional models, consumers need not go through the pain of applying for financing only to be declined—a single application form works for multiple lenders. Once the consumer completes the application, the platform uses waterfall decisioning in the background to route the application to the right lender. If the first lender declines the application, it is routed to the secondary lender, or if needed, to a tertiary lender. The platform’s waterfall decisioning solution is a key differentiator that enables Mastercard to stay ahead of its competition. Through this unique method, Mastercard ensures that its merchants are able to offer best fit financing to their consumers.
Shopping with Confidence
As an omnichannel solution, Mastercard Vyze makes financing possible online, through mobile apps, in-store at the POS, or even through call centers. To promote financing both online and in-store, merchants can introduce a range of attractive offers like zero annual percentage rate (APR) across a range of lending instruments, like a revolving line of credit with a private label credit card (PLCC), an installment loan for up to 48 months or even a short term option to pay off in four equal payments.
“Vyze is an end to end solution, we help merchants offer an effortless experience to the consumer,” says Erika Smith, director of marketing, Mastercard Vyze. Merchants can utilize the platform’s hosted experience to enable consumers to apply for their financing. The platform routes the information to the lenders, gets their decision, and presents it to the consumer. Once the application is accepted, the merchant processes the transaction and the purchase is completed. Merchants have control over which lenders should be present in their waterfall, the variety of promotions they want to offer through their products, and the decisions on the platform. Mastercard Vyze brings great benefits to merchants as it increases their sales by delivering financial services to a wider range of customers. This increases the confidence of the consumer in the merchant as they have an increased chance of financing, thus cementing their loyalty.
Mastercard collaborates with different types of lenders through the Vyze platform including revolving credit, closed end installments, lease to own and the latest addition being Pay in 4, which allows consumers to pay for their purchases in four equal installments over six weeks. With multiple lenders on board, merchants have the freedom to choose what they want to offer to their consumers. “Our platform brings all these lenders and a wide range of lending products together and delivers a solution that offers the right lending product to the consumer and a myriad of choices to merchants,” says Erika.
The implementation process for Mastercard Vyze is quite straightforward. The company works with each merchant to understand their business processes and then decides where the platform can be positioned in the business flow to work in the best way possible. Mastercard helps lenders in making sure that they present their best lending options accurately, fulfill regulatory compliance requirements, and provide consumers with terms and conditions.
“Our platform has been built using APIs and we develop the different user experiences further on those APIs,” explains Ferro. Merchants have the flexibility to integrate with Mastercard Vyze via an API and modify as per their requirements or utilize the platform’s hosted experience.
Increasing Sales through Financing
Mastercard’s ability to make financing a seamless experience for merchants, consumers, and lenders is evident from its expanding client base. On that note, Ferro explains how Mastercard solved the financing roadblock for Icon Fitness, one of their long-term clients. Icon Fitness offers exercise equipment through multiple brands such as Pro-Form and NordicTrack. A subsidiary of Icon, Freemotion is a commercial-grade fitness provider that manufactures weights sets, strength training machines, and fitness equipment, which are purchased by hotels, fitness centers, and corporate gyms. With the pandemic shutting down gyms, Freemotion had to shift its focus as consumers increasingly began purchasing equipment for their homes. This prompted Freemotion to expand its business model from B2B to B2C and offer buyers the flexibility to pay later through financing at checkout. Subsequently, they deployed Mastercard Vyze, which granted them access to multiple lenders through the waterfall solution. Freemotion could go live as a B2C business with financing around purchasing equipment enabling them to increase their sales.
"With Mastercard Vyze, merchants can connect with multiple lenders on the platform and thus, reach out to more shoppers"
The Mastercard Way of Shopping
Mastercard continues to strengthen its foothold in the payments industry by keeping itself up to date on the latest trends and innovations in the space. However, it does not waver from its prime focus while designing and developing products—the customers. The team at Mastercard understands how consumers are on the lookout for financing options to make their payments and require more purchasing power. As lenders, merchants, and consumers have different expectations when it comes to financing, Mastercard ensures that it accommodates their best interests in its platform. In order to achieve this, Mastercard is working toward adding new financial instruments that are popular in the market with its latest collaboration being Pay in 4. “We believe in ensuring that customer experience is top-notch with the assurance that they will get the financing they need at the point of purchase,” says Ferro.
The team is also planning to roll out feature enhancements that simplify processes for merchant integration with Mastercard while making sure that the platform can be used easily by lenders, merchants, and consumers. Additionally, Mastercard is looking to enhance its Vyze platform by leveraging the extended portfolio of Mastercard solutions for the payments ecosystem. This includes utilizing Mastercard’s wide acceptance footprint to broaden the reach of Vyze, as well as enhancements around fraud management, loyalty solutions, and other services that add value for merchants, lenders, and consumers.
As merchants look to offer the best financing services to consumers by connecting them to lenders, “Mastercard Vyze will be instrumental in making the journey an easy one,” concludes Ferro.