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The founder and CEO of Upgrade stated that the firm is currently working on a version of the Upgrade Card that will make it better suited for smaller expenses.
US fintech startup Upgrade is set to launch a “Buy now, pay later” (BNPL) payment method and will allow users to pay off their debt in four months without attracting any interest. The latest announcement from Upgrade is a bid to capture a piece of the overcrowded and ever-growing BNPL market and expects to debut the new service in the coming months.
Upgrade will soon lump a users’ purchases in a month and then create an installment plan for paying down the debt which is typically long-term, ranging anywhere from six to 36 months, and charge a fixed interest rate.
The founder and CEO of Upgrade, Renaud Laplanche speaking in an interview stated that the firm is currently working on a version of the Upgrade Card that will make it better suited for smaller expenses. “In that case, we don’t need to charge interest because it’s a smaller amount,” he said.
The Buy now, pay later (BNPL) market is now a $100 billion industry with the recent boom largely attributed to the recent coronavirus pandemic which saw an unprecedented rise in online shopping. The BNPL payment option or services allows users or shoppers to spread the total cost of their purchases over three or four months. Rather than charging users, BNPL companies make their money by deducting a small fee from merchants on each transaction.
Laplanche in the interview hinted that Upgrade’s BNPL service or product will, however, be different from those offered by established firms in the BNPL market including Affirm, Klarna, and Afterpay. Upgrade will reportedly put together a user’s card purchases and invoice them their charges over the four-month period unlike the usual checkpoint option on many merchants’ websites.
“What we like about embedding the product into a card is the broader acceptance,” Laplanche told reporters, adding that BNPL often relies on partnerships with merchants. “It’s starting to get mainstream online, but not so much in-store.”
Upgrade is an American digital banking startup that was founded in 2016. Laplanche, its founder was the former co-founder of the peer-to-peer lending company, LendingClub and served as its CEO for a decade before parting ways with the company. Upgrade has now risen over $200 million in equity funding as well as $3 billion in loans since its launch in 2017. The company reached a $3.3 billion valuation in August and according to its founder, the company is now aiming to make its IPO ready in the next 18 months.
Upgrade now joins Fast on the list of fintech firms hopping on the BNPL bandwagon. Fast, a start-up that is backed by payments giant Stripe, has also announced plans to offer BNPL as a payment method through its platform.