Fintech firm Curve has received backing from Credit Suisse to further develop its buy now pay later (BNPL) alternative. The move comes at a time when BNPL services are growing in popularity, first boosted by the Covid-19 pandemic and now driven by cost-of-living crises across the world. However, while the interest charged by Curve Flex makes it a more responsible form of lending, it may ultimately deter uptake among consumers.

Curve secured a $1bn credit line from Credit Suisse to expand its installment payment solution Curve Flex in the UK, the EU, and the US. The solution allows customers to retroactively split any transaction made with Curve – at any merchant, using any card – into monthly installments. It does so by giving customers a refund for a specific transaction within the last 12 months; in return, customers agree to pay it back across three to 12 months at a fixed interest rate of 14.18%.

With this funding, Curve also plans to introduce new features, such as the ability to access a direct line of credit before completing a transaction and the ability to refinance existing credit lines through Curve Flex.

The retroactive aspect of Curve Flex makes it different to BNPL counterparts, as users have already demonstrated their ability to purchase the item. In contrast, BNPL companies use soft credit checks, or in some cases no credit checks at all. This provides consumers with easier access to credit, which can result in individuals accruing debt they cannot afford to pay off. UK debt charity StepChange found that 87% of people with a BNPL loan also had at least one other form of debt. As cost-of-living crises bite across the world, there could be an increase in people utilising these services as they struggle to make ends meet this winter – thus driving up debt and leaving consumers overleveraged.

Curve: a valuable alternative to BNPL

Against this backdrop, Curve’s offering looks like a valuable alternative to BNPL. However, the interest fees are likely to deter many consumers compared to the fee-free model employed by most BNPL providers. Meanwhile, one of the key reasons for the success of BNPL services like Klarna is their ability to recruit retailers and essentially turn them into marketing outposts. Curve Flex will not have this ability and will therefore have to rely on its ability to effectively market to customers. While it is certainly a more responsible form of lending than many BNPL offerings, whether it will appeal to consumers remains to be seen.

Neku Dibie is payments analyst, GlobalData

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