Citi Retail Services has launched the first product of its new embedded payment suite Citi Pay called Citi Pay Credit. The Citi Pay Credit product is a digital credit card that can be offered by merchants at the point-of-sale. The company summarizes the product highlights as follows:
“Independent line of credit: Citi Pay Credit provides a new credit line that is separate from the Citi® credit cards that customers may already have in their wallets. It allows customers to be intentional when making large or unexpected purchases at participating retail partners.
Promotional rate financing: Citi Pay Credit allows participating retail partners to offer their customers promotional financing. Additionally, customers can opt for a major purchase plan based on what the retailer offers.
Real-time approval: Customers interested in Citi Pay Credit can apply for it directly within the checkout process at participating retailers, prior to the completion of their purchase, and receive a real-time credit and authorization decision.”
In addition to Citi Pay Credit, the company plans to offer merchants an add-on for installment lending options at a later date. Customers will pay in equal installments over a 6-to-60-month period based on the retailer. These longer payment terms suggest Citi Pay is going after larger purchases—think new 4K television at Best Buy.
While customers prefer to use traditional card products such as general-purpose credit cards and debit cards, private label “store” credit cards have been in decline, in part due to innovation in POS lending products such as Buy Now, Pay Later. We see Citi’s new solution as a best of both worlds as it’s presenting the customer with the loyalty offerings of a store credit card, while also enabling POS financing opportunities such as installment lending—watch out Affirm. Citi’s Retail Services division is already partnered with more than 20 retailers particularly within the home improvement, fuel, consumer electronics and specialty retailer segments. Could this be the next evolution in private label credit cards?
Overview by Ben Danner, Senior Research Analyst at Javelin Strategy & Research.