Citi Expands Flex Pay Offering with Apple Pay Partnership and Eyes Further Growth in Installment Lending Market
As the installment lending market continues to grow, banks like Citi are eager to capitalize on this emerging trend. After partnering with Apple Pay to expand its pay-over-time tool, Flex Pay, Citi’s head of card digital strategy and on-card lending, Jeff Chwast, discussed the bank’s efforts to bolster customer awareness and drive growth in the market.
Citi’s partnership with Apple Pay allows customers to use Flex Pay with their credit cards in Apple Pay, providing a seamless user experience. This move is part of Citi’s broader strategy to make Flex Pay more accessible and convenient for its customers. Chwast emphasized that while partnerships can create awareness and drive volume, they are not the only way for customers to access Flex Pay, which is also available through Citi’s mobile app and website.
Citi’s Flex Pay: An Overview
Flex Pay is a pay-over-time tool built into Citi’s U.S. branded cards portfolio, serving over 35 million accounts. Launched in 2019, the offering allows customers to select one purchase of at least $75 at a time and choose to pay for that purchase with fixed payments instead of an annual percentage rate (APR). Chwast noted that Flex Pay sales have seen double-digit growth each year since launch, including a 25% jump from 2023 to 2024.
The tool is available to accounts in good standing, which, according to Chwast, represents the vast majority of Citi’s customer base. While Chwast declined to share specific figures on the business’s size, he highlighted that Flex Pay is an important part of Citi’s overall strategy to meet changing consumer needs and provide more transparent borrowing options.
Why Installment Lending Matters
Installment lending differs from traditional credit cards in its more controlled and transparent nature. Chwast explained that consumers prefer installment lending because it allows them to feel more responsible about their borrowing. Despite being a smaller market in the U.S. compared to credit cards, installment lending is growing faster.
Citi’s entry into this market with Flex Pay was driven by the bank’s desire to offer customers an alternative to traditional borrowing options. By providing a product that meets emerging consumer needs for transparency and control, Citi aims to retain its customers and prevent them from seeking services elsewhere.
Partnerships: Visibility and Volume
While partnerships are crucial for driving volume and awareness of Flex Pay, Chwast noted that they are just one aspect of the bank’s strategy. Customers can access Flex Pay through Citi’s app or website without relying on partnerships. However, these tie-ups provide convenience and create awareness among customers.
Chwast declined to disclose specific figures illustrating the significance of partnerships in driving growth but acknowledged their importance in contributing to the success of Flex Pay. Partnerships offer both convenience and value to customers, making them a critical component of Citi’s strategy in this market.
Competitive Landscape: Differentiators
The installment lending arena is highly competitive with many providers, including Affirm and Klarna. To differentiate itself from rivals, Chwast highlighted that Flex Pay offers several unique benefits compared to traditional pay-over-time options:
- Accessibility: No application or credit inquiry is required for customers to access Flex Pay.
- Rewards integration: Customers can earn rewards on their purchases when using Flex Pay.
- Built-in transparency and control: The fixed payments schedule provided by Flex Pay offers users more control over their debt, making it a more transparent option compared to open-ended lending.
Looking Ahead
Citi’s partnership with Apple Pay marks a milestone in the growth of Flex Pay and its entry into new spaces such as at the point of sale. Chwast emphasized that the bank remains committed to exploring new partnerships and continually improving the product experience for customers.
The future outlook for Citi’s installment lending offerings appears promising, given the company’s strategic approach and dedication to meeting emerging consumer needs.
Conclusion
Citi, through its partnership with Apple Pay, solidifies its commitment to the rapidly growing installment lending market. With Flex Pay leading the charge, the bank demonstrates a strong focus on providing transparent and controlled borrowing options for its customers.