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Education

Support subprime consumers with other product types of defaults, which, in turn, means the
consumer could then be offered a low
While extremely useful, credit cards can also be expensive and risky to operate, cost product.
and thus interest and fees quickly become a necessary component. However,
in our evolving financial landscape, a credit card alone may not be the only, or Secured cards are another older, yet
best, option for a consumer. still highly effective product that
has seen significant growth recently,
Card issuers shouldn't be afraid to explore other, perhaps more efficient offer- most notably with popular options
ings they could provide in addition to traditional cards. Two compelling alter- like Chime's Credit Builder Card.
native products that have seen a significant rise in demand are buy now, pay However, card issuers should keep in
later (BNPL) and early wage access (EWA) options. mind that while these products serve
a useful purpose for consumers, they
BNPL formats, where a customer typically completes a purchase in four pay- are not true credit products but rather
ments, are similar to credit cards in many ways. Both receive revenues from credit building tools.
the merchants that make the payment options available, but BNPL is a purely
digital product that is close-ended, with the merchant as the captive marketing And while secured cards have been
channel. This offers a vastly lower cost, especially for high-risk, small dollar shown to increase credit scores, there
customers, which means the consumer does not need to pay heavy fees and is growing evidence that this may
interest. be somewhat of a mirage. Regard-
less, these cards generally are not big
With EWA, consumers can access their future paid wages today based on the profit centers on their own and are
pay they've already earned, but their employer has yet to run through payroll. unlikely to fill the revenue void from
This gives consumers a small dollar cash flow option at little or no cost if paid lost unsecured card customers. How-
by their employer. ever, secured cards can be a bridge to-
ward moving customers into a more
The key advantage EWA offers is limiting spending to available income while traditional credit or loan product.
in turn getting paid first from that income. This dramatically lowers the cost
With the current scrutiny on con-
sumer fees, it's likely we will see the
CFPB's new proposed cap take effect
in one form or another. And while
credit card issuers are rightfully con-
cerned at the impact it could have on
costs and lost revenue, it's also impor-
tant to note that this regulation is be-
ing put in place to protect consumers.
HOLIDAY PAYMENT As in past instances, credit card issu-

SOLUTIONS ers will likely find alternatives to mit-
igate these losses and generate reve-
nue. However, those that focus on do-
ing so in ways that help and support
ACH • LEVEL III • EMV consumers first are much more likely
to be in a better position to meet those
regulatory challenges now and in the
WEB • RECURRING future, strengthening their customer
relationships at the same time.
CASH DISCOUNT
Geoff Brown is a co-founder and CEO of
CUSTOMER DATABASE Highline Technologies, an award-winning
payments fintech unlocking payroll-linked
lending and bill payment, boosting financial
C A L L F O R A D E M O inclusion, better rates and costs for consumers,
and lower risk for the lenders. Reach out to him
8 0 0 - 2 9 6 - 4 8 1 0 at linkedin.com/in/geoff-brown-b6561b2.

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