Consumers appreciate the convenience of flexible payments. With no lengthy application process, point of sale financing helps spread payments out over time. Working with retailers like Walmart and Home Depot, firms like Affirm and GreenSky offer customers payment terms on their purchases.
There have been advances on the credit card side, too. American Express has its own form of flexible payments embedded into its cards. Two years after soft launching the feature, American Express' Pay It Plan It continues to grow. The program gives 21 million eligible U.S. Card Members more flexibility to pay for larger purchases over time or quickly pay off small purchases -- all while still earning rewards.
It's a creative program. Customers can choose up to 10 purchases of $100 or more to combine into the plan and have up to 10 active plans at a time. What Amex is finding is that customers use Amex's flexible payments to make multiple payments on their bills -- in a way, getting rewards for their spending while controlling their bills like a debit card.
Tearsheet caught up with American Express' Dory Butler, vice president, global consumer lending new products to discuss Pay It Plan It, the performance of the program, borrower trends and where the company plans to go with it in the future.
Flexible payments is expanding -- existing players and new entrants are launching products. What's driving this trend of flexible payments?
It comes down to people wanting more control of their finances. When we created Pay It Plan It, we were the first to market and were responding directly to our Card Members’ feedback that they wanted more options for how they pay for the things they buy.
Through conversations with Card Members, we saw that they wanted more control of their finances as they were starting to make larger purchases. They told us they wanted to avoid the pitfalls of debt and don’t want to pay interest on smaller purchases like coffee or lunch with friends. However, there are times they need to pay for a larger purchase, like an unexpected vet bill or new items for their home. We also saw a trend of people making multiple payments before their billing cycle closed, and this insight inspired our development of Pay It Plan It. This way, Card Members can use their Card like a debit card, paying off small purchases under $100 immediately before they hit their statement, while still earning rewards.
While others have entered the flexible payments space since then, no other card company gives its Card Members the control and flexibility to choose how to pay for specific purchase amounts in this way.
Why do you think Millennials are more likely to use this product?
Pay It Plan It allows Card Members to continue to earn rewards while making payments that fit their lifestyle, which we know appeals to Millennials. We’ve seen 50 percent Millennial participation in Pay It Plan It and that they are 3x more likely to use this feature.
Card Members are engaging with the American Express app more frequently than ever before, as we are continually focused on growing digital-first benefits and services. Making features like Pay It Plan It available in the app is part of a broader strategy to become essential to customers’ digital lives.
We are committed to having our Card Members’ backs at every step of their lives, and with Pay It Plan It, Card Members have the ability to know exactly when they will pay for a specific purchase amount and exactly how much it will cost them.
How was the soft launch conducted -- did you target specific cardmembers or specific demographics?
We first rolled out the feature to U.S. Consumer Lending & Cobrand Card Members in 2017. We created Pay It Plan It for a wide range of Card Members -- from those starting families to those who are sending children off to college, they want to avoid what they call “statement shock” when they get their monthly statement.
We saw that many Card Members were paying off purchases early to avoid large monthly statements, which inspired the feature, which is now available to over 21 million eligible U.S. American Express Card Members.
Do you plan to communicate more about PIPI going forward?
We are excited about the initial momentum and engagement we’ve seen with the Pay It Plan It since its launch in 2017. Following the great traction we’ve seen, in 2018 we rolled out a new advertising campaign for Pay It Plan It, creative jointly developed with beloved star and longtime friend of the American Express brand, Tina Fey. We will continue to communicate about Pay It Plan It on the earned, owned and paid channels that resonate with our Card Members.
We’re looking forward to what’s next for Pay It Plan It as we expand to more Card Members.