Credit card companies seek to advance further in the market for “buy now, pay later” (BNPL). American Express (Amex) today announced its partnership with oppy, the US subsidiary of the Australian fintech Openpay, to allow all its card customers in the United States to pay in installments for purchases in the healthcare and automotive segments.
The partnership is American Express's first third-party BNPL deal in the United States, a company spokesman said. Amex will thus help businesses in these sectors on its platform.
Opy describes its solution as an improved version of the traditional BNPL model, which it calls “buy now, pay smarter”. Opy will lend up to $20,000 at a time to a client, charging a flat rate and offering up to 24-month plans, as opposed to short-term installments offered by companies like Affirm y Klarna.
American Express already offers its own BNPL options under its "Pay it Plan it" program launched in 2017 for purchases over $100, with a fixed interest rate. The Opy partnership will help Amex meet demand for options to finance large purchases over longer periods of time, said Opy US CEO Brian Shniderman.
"If it's a large item, and this is where we specialize, things that cost between $1,000 and $20,000, 60 days is not enough time to pay for something that is more expensive."
The company can offer lower rates, never higher than 9,99%, because it targets very specific sectors that attract knowledgeable customers financial, according to Shniderman. Its average customer is 40 years old, while the average customer of many other BNPL providers is in their 20s and 30s. In addition to healthcare and automotive, Opy offers financing for home improvement and education, although those two verticals will not be included in the Amex partnership.
“Our product is predictable, transparent. Other companies, they have deferred interest over time, there is interest in arrears, and if you miss a payment, they recalculate all that debt at interest as if you had a very high rate for the life of the loan,” said Shniderman, who worked working closely with Amex in his previous role at Deloitte.
Amex's main competitors have also made recent forays into BNPL in an attempt to keep up with payment companies like Stripe and Square. Mastercard launched its Mastercard offering with a proprietary fee model in fall 2021, and Visa announced its partnership with Klarna shortly after.
