Fintech Startup Launches BNPL Alternative
Accrue Savings, a fintech startup based in New York, recently announced an alternative to the typical Buy Now Pay Later (BNPL) loans that the company says will be safer and more beneficial for consumers. Importantly, the offering is not a credit product; instead, it is a savings account tied to a specific purchase that will initially be offered through seven retailers, including Camp, Casper, and Mark Henry.
“This is here for retailers to offer payment diversity,” said Michael Hershfield, Accrue Savings founder and CEO, according to American Banker. “Not everyone wants to buy today. Many people are thinking about buying things six to nine months from now.”
When consumers find an item they want to buy, they will be able to choose a savings schedule, link their bank account, and create an Accrue Savings account. A dashboard will show their purchase progress, and after they hit the amount, Accrue will send consumers a debit card linked to the retailer and purchase.
Accrue noted that the product is meant to be safer than typical BNPL loans because there are no fees attached to the accounts. Users can withdraw their principal and deposit the money back into a regular bank account at any time.
“With 66 percent of consumers viewing ‘Buy Now, Pay Later’ programs as financially risky, Accrue Savings rewards people for saving for the things they want instead of taking on more debt,” Hershfield said in a press release announcing the product. “As the first payment option that empowers consumers to avoid the costs of credit, Accrue Savings strengthens the relationship and loyalty between brands and consumers and rewards responsible debt-free spending.”
“Brands are increasingly seeking ways to deepen their relationships with consumers that don’t rely on debt. Accrue Savings is an ingenious, long-overdue alternative that rewards customers with cash incentives just for saving,” said Taylor Greene, Managing Partner at Twelve Below, one of Accrue Savings’ investors. “With Accrue Savings, merchants can build brand affinity and brand access by impactfully redirecting rising CAC costs and putting that money directly into customers’ pockets.”
With the product, retailers can incentivize savings by offering cash rewards, like bonuses when customers reach a certain percentage of their goal. Users will also be able to send family and friends a link to their Accrue wallet for contributions.
In a seed funding round, Accrue raised $4.7 million. It will make a profit from interchange fees when customers use their Accrue debit cards, as well as with the performance fee it charges retailers when customers make a purchase.