The card will help customers who do not qualify for traditional credit products to lease eligible goods at participating Acima merchants near them. The first-of-a-kind offering is targeted at unbanked and underbanked communities to make purchases if they are strapped for cash or have a low credit score.
The LTO payment cards eliminate upfront transaction risk faced by merchants as Acima will buy products from the retailer directly for lease to the customer.
Rent-A-Center's Acima fintech provides alternatives to traditional consumer lending. The lease-to-own card enables consumers to buy items such as furniture, consumer electronics and computers from retailers that partner with Acima. The company's web site listed a number of local retailers such as tire stores, discount mattress shops and furniture merchants.
The offer targets cash-strapped consumers who cannot use typical credit channels. Consumers can use the new category of payments and receive instant approval for up to $4,000 by applying through the Acima mobile app in the coming months. Still unknown is the factors to be considered for approving a customer.
"This is the first LTO payments card in the industry that provides retailers access to a significantly larger segment of consumers they couldn't previously count as customers," Jason Hogg, Acima's Executive Vice President said in a press release. "With the LeasePay™ card, consumers will have access to an easy-to-use payments vehicle they can rely on to enter lease-to-own transactions with Acima."
The LTO payment card, which will be available in a virtual as well as a physical version, will help drive sales, as it eliminates the risk for a retailer. Acima will purchase the product directly from the merchant and lease it out in monthly installments to the consumer.
Mastercard is powering the LTO payment card and will service consumers and retailers alike through its technology infrastructure and merchant platform. Customers can use the card in physical stores, through the mobile app, or through a browser extension.
Acima doesn't charge an interest fee and consumers aren't tied into a long-term debt obligation once they make a purchase. The Sandy, Utah based-fintech charges a flat fee on purchases which may vary from state to state. Customers can terminate their lease at any time and return the product to the retailer without incurring additional charges.
The product is slated to launch this summer giving customers a lease-to-own payment channel.
The offering is similar to Splitit's payment channel which splits a consumer's medium ticket purchases on their existing credit line. The company recently partnered with UnionPay International card networks to expand its offering across the globe and saw a 300% revenue increase during the pandemic.