Ally-Mastercard Alliance to Boost Point-of-Sale Financing

Ally Financial’s personal lending arm has teamed up with Vyze, a financing platform owned by Mastercard, to enhance its ability to support installments-based payments.

The deal marks Ally’s first move into the point-of-sale retail financing market and will allow retail merchants access to “a financially stable lender for higher-ticket sale options”.

“In today’s economic environment, flexible, affordable financing options that protect consumers’ and businesses’ long-term financial health have never been more important,” said Hans Zandhuis, head of Ally Lending.

“Mastercard’s deep experience in global payment and technology positions Vyze as a leader in the point-of-sale lending market.

“Together, our partnership gives merchants, who want to offer consumers trusted and stable installment loan options, a powerful, digital option.”

Ally Lending’s service through Vyze will offer a digital process for customers to purchase items costing up to $40,000 with payment options at a monthly fixed rate for between six and 60 months.

According to a recent report from Business Insider, the market for point-of-sale financing solutions has grown significantly since the global financial crisis of 2017-19. Younger people are especially interested in alternatives to credit cards, the research found.

This market’s growth has been driven in particular by financial technology specialists, with traditional banks and store card providers scrambling to keep up.

Merchants who offer point-of-sale financing options see on average a 32% increase in sales and a 75% increase in order value, according to the FinTech World Report 2019.

Earlier this year, Ally Financial was forced to abandon a planned entry into the consumer credit card market through the acquisition of Cardworks. The plan was  scrapped in June  owing to the “unprecedented economic and market conditions” resulting from the Covid-19 pandemic.

Point-of-sale payment methods have also seen significant change in 2020 so far, with customers increasingly reluctant to use cash amid the Covid-19 pandemic.

In May, PayPal rolled out a contactless point-of-sale service based QR codes. The payment giant’s app now allows customers to buy and sell “in-person, safely and securely, and touch free”, it said in a statement.

In June, Canada’s DCBank partnered with Toronto-based fintech company XTM to facilitate cashless transactions throughout the country’s sports venues and shopping malls.

The two companies announced that they would be providing new kiosks in business premises and retail venues where consumers can exchange up to C$1,000 (US$737) in cash for a prepaid Mastercard.

In a statement, DCBank and XTM said the development would help companies reduce their reliance on cash.