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Capital One to test ‘buy now, pay later’ product this year, CEO says

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The emblem and ticker for Capital One are displayed on a display on the ground of the New York Inventory Trade (NYSE) in New York, U.S., Might 21, 2018. REUTERS/Brendan McDermid/File Picture

Sept 13 (Reuters) – Bank card issuer Capital One Monetary Corp will take a look at a “purchase now, pay later” product this yr as competitors for shopper loans builds from monetary know-how companies offering retailers with simple methods to supply low cost financing for purchases.

“We can be testing a beta model of our personal ‘purchase now, pay later’ product,” Capital One Chief Government Richard Fairbank mentioned at a Barclays investor convention on Monday.

Fairbank mentioned Capital One’s take a look at will embody point-of-sale loans for purchasers at a “choose set of retailers” with which it already has relationships.

Banks and financial institution traders have been more and more cautious that ‘purchase now, pay later’ loans would possibly minimize into a possible rebound in lending income from individuals who used bank cards for borrowing functions.

Many purchasers have paid down bank card balances through the coronavirus pandemic and eradicated curiosity costs. However some have being tempted by ‘purchase now, pay later’ plans to borrow for gadgets they need solely to then on funds and run up curiosity costs.

Fairbank mentioned that Capital One will use information from the exams to grasp the merchandise higher and the way they’ll attraction to retailers and shoppers.

“We’re watching this product intently and definitely not taking this development evenly,” he mentioned.

Fairbank mentioned the choices have change into out of the blue standard as a consequence of assist by enterprise capitalists and the willingness of retailers to subsidize the curiosity prices.

“The elephant within the room is the sustainability of the service provider subsidy,” Fairbank mentioned. “That is fueled by retailers’ beliefs that they are getting incremental quantity.”

Reporting by David Henry in New York
Enhancing by Paul Simao

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