Credit Lady
Credit Lady

Consumer Loans

Buy Now Pay Later Service From «PIE CREDIT»

Client: PIE CREDIT

Background

Pie Credit is a financial company specializing as a BNPL lender that acquires most of its users via the merchant partner model, where lenders sign contracts with specific online retailers to embed their products on the retailers’ checkout pages. Consumers shopping on those retailers’ websites and apps see the opportunity to split their purchase into four equal, interest-free installments—a service provided by the BNPL lender.  The average ticket sizes are close to $1000, and the average tenure of the loans is about eight or nine months. Typical verticals include electronics, furniture and home goods, sports and home fitness equipment, and travel.

Challenge

Improve the customer acquisition model. Customers who used BNPL lenders through the merchant partner acquisition model couldn’t see the credit assignment amount separately from their transactions. Because BNPL was initially executed at checkout, the credit decision process was intertwined with the approval or decline of the specific purchase. Pie Credit has decided to improve its customer acquisition model by making the amount of available credit more explicit by adding one stage in the Loan Origination Workflow – the pre-qualification process.

‍When users log into the app, they are encouraged to fill in a prequalification form before purchasing and be informed of a pre-approved or prequalified amount of credit to spend. This amount is a placeholder until the user tries to take out a BNPL loan, at which point they are re-underwritten.

Loan Servicing 

Self-Service Repayment Method

Pie Credit is considering implementing a self-service repayment editing module into its current infrastructure. By doing so, they aim to improve payment discipline among borrowers and keep credit losses below the desired threshold. This new feature may also lead to a more lenient approach towards underwriting and credit decision strategies, demonstrating that Pie Credit is committed to being a flexible and customer-centric financial institution.

Return Purchase Dispute

The return process can become complicated if a merchant declines to authorize a refund for an item in dispute. In such cases, the borrower should contact the BNPL lender to file a dispute. This can be done either via the lender’s app or by contacting customer support. The lender will begin an investigation and get both the borrower and the merchant. Once the investigation is complete, the lender will determine which party is responsible and may issue a refund or credit. However, since BNPL loans are short-term, lasting only six weeks, resolving the dispute within the loan term may not be possible. If this happens, the borrower may need to make additional payments under the loan contract until the investigation is concluded. Pie Credit understands this and allows borrowers to defer payment for a short period during a reported dispute.

Solution

Pre-qualified or pre-approved for a Personal Loan

Our team has created The Configurable Loan Application Editor, which allows Pie Credit to easily create tailored pre-qualified or pre-approved loan application workflows based on customer risk profiling without requiring coding or specialized skills. Once pre-approval is granted, the loan amount is displayed in the Borrower Workspace. For returning customers using our digital lending solution, the application form is automatically filled with their existing information to streamline the process. Additionally, we have developed a Marketing and Loyalty Module to enhance our personalized personal loan services and increase customer acquisition rates.

Loan Servicing – Repayment Methods

The Borrower can now access the Self Service Repayment Schedule Editing Module within their Workspace. This module allows them to change their loan repayment schedule by adjusting payment dates, the principal payment schedule, and the interest payment schedule. Once the Borrower has created their adjustment schedule, they can send it online to the Lender’s back office for approval. Once approved, amendments to the Credit Agreements are automatically processed and presented in the Borrower’s portal. The documents can be signed using e-signature or OTP (one-time-password).

Return Purchase Dispute

The process of returning an item begins with the merchant. If the customer faces any communication difficulties with the seller, Pie Credit can act on behalf of the buyer side to initiate a dispute. During this period, the buyer is not obligated to make any payments until the dispute is resolved. This ensures that both parties are treated fairly and that the process is smooth and hassle-free.

Result

Our client can lower costs for customer acquisition by using the pre-qualified and pre-approved stage of the Loan Origination workflow process. They can also customize the Loan Application Editor and personalize loan services for their clients. Pie Credit customers can easily access information about their loan accounts, view repayment details, receive notifications about overdue loans, and make payments or choose alternate options using our Self-Service Repayment Module. Debtors can view their overall debt status and take actions like selecting a preferable date for repayment, providing reasons for inability to pay, or paying now. This module also reduces the number of customer support calls, freeing up staff for more profitable work and enhancing operational efficiency. By changing the return dispute protocol with Merchants, Pie Credit can improve customer satisfaction and foster lasting loyalty..