Much has been written about buy now, pay later (BNPL) in recent months, and for good reason. The main players in payments are involved, in particular Visa, Mastercard and Discover; and last week Square announced plans to acquire Afterpay for $ 29 billion.

But before there was BNPL, there was leasing with the option to buy – and while it doesn’t make the headlines as much, it can fill a void that BNPL leaves open. Last week, Acima, the virtual capital leasing FinTech arm of Rent-A-Center, rolled out a digital platform focused on improving the retail rental experience, including a new Acima mobile app, an online shopping platform and browser extension. Acima’s LeasePay card, unveiled in April 2021, is now also accessible via the mobile app.

See: Rent-A-Center’s Acima Unveils Digital Retail Rental Platform

On the file

“The traditional retail purchase payment system, consisting primarily of cash, credit and debit cards, essentially excludes a large segment of the population – the financially underserved.”
—Jason Hogg, Executive Vice President of Acima

“If your fridge breaks down and you have three kids, you can’t wait for your next paycheck to hopefully buy a new one. And if you don’t have access to the credit to put it on a private label credit card, you surely aren’t going to grab a fridge and split it into four payments.
—Orlando Zayas, CEO of Katapult

Read more: Katapult CEO: Lease plans with option to buy offer a non-Prime alternative to BNPL

By the numbers

  • 45: percentage of customers who return to Katapult
  • 9: average number of leases per customer
  • 29,000,000: adult consumers have used BNPL in the past 12 months
  • 26: percentage that could not have made a purchase without BNPL

Complement, not compete

Zayas told Karen Webster that the capital lease is not an offer from BNPL, nor does it compete with BNPL’s suppliers. The offer is rather complementary. When a consumer requests financing with Affirm, for example, and Afffirm cannot approve the offer, consumers find themselves using Katapult.

“We had to learn how to adapt our models to better capture this data, make a decision on that consumer within five seconds and do it the right way so that we could [mitigate risk]”Zayas said. It’s a big challenge, especially with the limited data the company has to make such decisions, but it’s also a big opportunity.

In recent years, Rent-A-Center and Aaron’s have moved to centralized decision-making processes as e-commerce has grown, which has sped up the consumer approval process and increased digital payments at both retailers.

“What’s great is the centralized decision-making and the improvements to operations are how well-composed our teams are right now,” Aaron CFO C. Kelly Wall told analysts at the company’s earnings call last month. “We have the impression of reacting quite quickly.

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