Updated 5/11/2023: The
White House declared the end of the Covid-19 Health Emergency May 11,
2023 so some of the details mentioned in this article regarding the
CARES Act or pandemic may have changed.
Buy Now Pay Later (BNPL) services skyrocketed during the
2020 ecommerce boom. These services soared nearly 50% from July 2020
through March of 2021.¹ But, it stumbled in one area: the travel
industry. As consumers traded their vacations for staycations during
the global pandemic, the travel-focused BNPL company Uplift went to work innovating and
finding new ways to help consumers navigate the economic turbulence,
while also proactively planning for a big, post-COVID travel rebound.
Faye Xu, head of
credit at Uplift, recently sat down with us during Ignite LIVE to share
important pivots the company has made in the past 12 months and offer
exclusive insight into this dynamic fintech sector.
It’s no secret: 2020 was tough on the travel industry. At
one point, Xu says the industry was down by up to 80% last year. In
response, she says Uplift quickly pivoted its operations to address
its customers immediate, non-negotiable needs. Also, Uplift started to
research long-term solutions for its customers.
A key area of focus was portfolio management. To help its
valued customers better manage the unrelenting economic uncertainty
of 2020, Uplift launched two new programs.
helped customers who couldn’t make their normal
payments by allowing them to make a minimum payment
and the balance was deferred.
Cancellation deferment allowed customers
to (depending on their unique situation): 1) cancel
their trip, if eligible; 2) cancel their loan, if
applicable; and 3) defer their loan payments to help
protect their credit.
The company also started rethinking loan originations. With
travel at unprecedented lows, the company couldn’t do much about
loan volumes. Instead, it focused on the future. Uplift researched
the next iteration of credit policies to prepare for the inevitable
moment when consumers could travel again.
Unique Growth Opportunities
Xu says the company is excited about its unique growth
drivers within the BNPL sector, starting with its zero percent
interest product. Partners love it because it helps them manage
inventory, especially now when demand is still suppressed in some
areas like cruise lines. Consumers love it because they can go on
their dream vacation, interest free.
Other factors fueling growth within Uplift’s
Millennials and Gen
Z. They are embracing point-of-sale financing,
as they look for alternatives to the annual fees and high
interest rates of credit cards. What’s more, XU says
consumers across the credit spectrum—including subprime,
prime, and new prime consumers—are using BNPL services to get the
zero percent interest rate.
Instant BNPL technology. It
enables consumers to take advantage of “on-the-spot” pricing
for airline tickets and other travel deals that quickly
change depending on the date or time of the online
Installment loans are easy to understand and
transparent. This helps consumers easily budget
travel into their monthly expenses. They can even ‘upgrade’ their
vacation and see how it will impact their monthly payments.
The Data Differentiator
At Uplift, customer data is a big deal. Although Xu says
only a few pieces of personal information are requested to
complete a loan transaction—name, address, and phone number—it’s
all validated and used to help the company better serve the
customer when they return for their next booking. It helps Uplift
better understand the customer’s payment behaviors and preferred
payment methods. This allows the company to make better credit
decisions and offer customers a more tailored experience the next
time they book.
Likewise, as Uplift grows and scales its services across
different industry partners, it will be able to offer its loyal
customers an increasingly enriched experience each time they return.
As for external data, such as alternative data, Xu says the
cost of the data is always top of mind. Unlike credit card issuers
that deal with thousands of dollars over many years, BNPL loans
are usually in the low hundreds and repayable within a short
timeframe. For example, a piece of data might only cost one
dollar, but if the installment loan is only for $100, that’s 1%.
The company must be able to gain the most value possible from an
external data source to make it worth the investment.
As for what’s ahead in the next 12 months, Xu says Uplift is
applying the knowledge gained in 2020 through its proactive research
on the next generation of credit policies. The company has new
projects lined up to take advantage of better underwriting strategies
that will allow the company to scale faster as travel quickly rebounds.
It’s also evaluating and managing inbound interest from new
merchants since its platform is essentially built for any sort of
point-of-sale transaction and financing, not just travel. Xu and
Uplift are keeping a close eye on the economic recovery and the
company stands ready to pivot its strategy again as needed. However,
Xu says BNPL is expected to triple its growth in the U.S. over the
next three years. The point-of-sale transaction isn’t a trend leftover
from the pandemic—it’s here to stay.