Part of Our Money20/20 Interview Series
By John San Filippo
Money20/20 USA, the fintech mega-conference, was once again held in Las Vegas, this year from Oct. 23-26. And once again, Finopotamus was onsite talking with industry leaders about a wide range of topics. These interviews are captured in this series of articles.
Finopotamus spoke with ChargeAfter’s CEO and founder Meidad Sharon about opportunities for credit unions to provide buy now, pay later (BNPL) options to their members.
Finopotamus: Please briefly explain ChargeAfter’s business for our audience.
Sharon: ChargeAfter is the leading platform and network for point-of-financing and BNPL. We have the technology and the connectivity to connect financial institutions including credit unions into the merchant environment. And we have the merchants on the other side that are looking for a connection to multiple lenders covering the credit spectrum, the financial product spectrum, and the geographic spectrum.
Finopotamus: How does a credit union become part of this ecosystem?
Sharon: ChargeAfter provides a white-label solution. The credit union can use our technology to launch BNPL and point-of-sale financing products into the merchant space. We provide both the technology and the distribution. This is what’s really unique about us – we have a network of merchants. We work with very large merchants and with dozens of small merchants where, as soon as we have credit unions plugged into our system, we can connect them into those merchants.
Finopotamus: To be clear, the credit union doesn’t need to find its own merchants?
Sharon: They can if they want. If they take our white label solution, it means that they now have a product with all the connectivity to the merchants, with all the ability to provide an interface to the merchants to offer them different programs, to do all the positive transaction relationships that are needed with the merchants. We connect them automatically to our network, so they will have distribution, but they can also use it for their merchants independently.
Finopotamus: This seems like it could be a good fit for credit unions that are focused on serving the merchants in their communities. Is it accurate to say that a credit union could create its own local merchant network and connect them all using ChargeAfter’s software?
Sharon: Completely. They will use our technology. We will brand it. We are completely behind the scenes. It's their product. We will brand it under their name and they will be able to offer this new product to their merchants so they can keep serving those merchants. And they can keep getting new members via those merchants. So, they also have a new acquisition channel.
Finopotamus: Are there any hardware requirements for the credit union?
Sharon: There is no hardware; it's all cloud-based microservices software. Our advanced tools that are sitting in the cloud. We don’t require anything from the credit union outside of integrating. All we want the credit union to do is to be a credit union. We will provide all the rest.
Finopotamus: Do you require integration to the credit union’s core data processing system?
Sharon: Yes, we have plenty of experience with that. We're working with the largest banks in the United States today – with Citibank, Synchrony Bank, Wells Fargo, TD Bank.
Finopotamus: The cloud generally makes solutions more scalable. How far down can you go in terms of institution size?
Sharon: We can certainly work with tier two and tier three financial institutions (FIs) all over the U.S. Our product is completely scalable.
Finopotamus: Describe the user experience from the perspective of a consumer visiting a participating merchant.
Sharon: First, let me make clear that ChargeAfter is an omnichannel solution. We started in e-commerce, but we also offer call center and in-store point of sale.
If you are coming as a consumer to an e-commerce site that is working with us, you will see our promotional widget on the product page that lets you know that financing is available in advance before you reach checkout. You’ll know that this credit union is offering this program and you'll be able to apply and be approved on the spot, even before you reach the checkout.
Finopotamus: Do you think credit unions and other community FIs have an edge over pure-play BNPL providers because of their strong existing brands?
Sharon: What we’ve seen in the last six to 12 months is that there are regulatory changes and interest rate changes that are pushing making the lives of these new, sexy fintech BNPLs very hard. What we feel from the other side, from the FIs that we are working with, that they see it as their opportunity to get the market back into their hands. They're already regulated. This is not an additional cost.
Community FIs have much better cost structure in terms of funding because they have deposits, as well. We are enabling so many FIs now with the white-label solution because they want to take the market back. They want to own this consumer. We certainly think that the timing is right for banks and credit unions to seize the opportunity.
Finopotamus: Do you have a closing message for credit unions?
Sharon: We are connecting this disconnected market of BNPL; we are building the Visa of instant credit. If you think about this market in comparison to the payment space, this market is acting like the payment market was before Visa and MasterCard. We are connecting everything together so the merchants can have the best financial institutions providing credit to them. And from the other side, the financial institution has all the connectivity that they need into the merchants.