In the point-of-sale financing space, fintech Wisetack is taking a different path than big buy now, pay later players by focusing on installment payments for in-person services such as home repairs.
By linking with both banks and software companies, Wisetack’s platform enables pay-over-time options for the services industry. The San Francisco-based fintech, which has raised $64 million since its 2018 founding, works with tens of thousands of small-services merchants through its software integrations, CEO Bobby Tzekin during an interview last week.
The company’s fintech infrastructure is embedded into the software those merchants use, allowing the customers of those companies to pay over time for their services, he said. Some of Wisetack’s software partners include Jobber, SmartServ and Thumbtack. Wisetack’s bank partners handle the lending aspect of the transaction.
Wisetack most commonly competes with credit cards, although private-label card issuer Synchrony Financial and bank Wells Fargo are other competitors in this corner of the market, Tzekin said.
In June, Wisetack and Citizens Financial Group teamed up. The partnership offers the Providence, Rhode Island-based bank a potential customer base it wouldn’t otherwise have access to, while Wisetack benefits from working with a large financial institution, Tzekin said.
Wisetack, which also partners with San Marcos, California-based Hatch Bank, plans to announce more bank partners in the next couple of quarters, Tzekin said.
Editor’s note: This interview has been edited for clarity and brevity.
PAYMENTS DIVE: What is Wisetack’s focus in the point-of-sale financing space?
BOBBY TZEKIN: We don’t do e-commerce; we focus on small, services-based merchants. Our installment payment plans go anywhere from three months to five years, and everything that we do is an actual consumer loan issued by a bank. Our average transaction size is close to $5,000. We work with a lot of home services merchants, like folks doing HVAC, or plumbing, or electrical; landscaping, roofing, windows. We work with dental offices, we work with car repair providers. We reach these businesses through the software they're already using. We embed into that software as an integrated payment option for in-person services. Many of these merchants either would not have that option available to them, or they’re using another product that is not embedded and tends to be more confusing and more expensive for customers.
What’s Wisetack’s strategy in landing more bank partnerships?
Our strategy with the banks, for the time being, will be to partner with fewer but better partners, so banks that are large enough and committed to the space. We’re not looking to have dozens of partners, but have several that are really strategic and committed.
Given this year’s bank failures and the uncertain economic outlook, have financial institutions’ interest in this type of partnership changed?
The partnerships and conversations we have with banks are long-term and strategic in nature. These banks see the market changes and move toward installment payments for consumers and know they need to participate in the market shifts to keep their large consumer business units successful. We're working with the (executive) teams as they plan for many years ahead. Overall, nothing has changed in how we work with these banks.
How does Wisetack’s position in the installment lending space differ from traditional BNPL providers?
We’re much more differentiated. There are a number of BNPL brands doing very similar things. In terms of profitability, I think many companies, given the environment the past few years, maybe managed their financials in a certain way that assumed access to lots of capital. We did less of that, in general.
How has the BNPL trend brought more attention to the installment lending space?
Point-of-sale borrowing in general is short-circuiting a two-step that was happening before: Fifteen years ago, people would run up their credit card bills, and then a few months later, they would go to online lenders and refinance the credit card, because they knew, OK, if it’s a bad deal that I’m revolving, I’ll get a loan to pay it off. So there's no need for that if I can just take out the installment payment when I'm making the purchase. Technology is finally making that available everywhere.
