After lining up Apple Pay as a partner, Citi continues to hunt for partners for its pay-over-time tool Flex Pay, in part to bolster customer awareness of the offering.
That’s according to Jeff Chwast, Citi’s head of card digital strategy and on-card lending. Chwast, a managing director at the New York City-based bank, has been at Citi for about seven years; he spent 17 years at American Express before that.
Citi’s latest Flex Pay partnership, with Apple Pay, was rolled out last month. Once a U.S. Citi customer has added their credit card to Apple’s mobile wallet, users making a purchase through Apple Pay can select that credit card and opt to pay later with Flex Pay.
To be sure, Apple Pay also counts buy now, pay later providers Affirm and Klarna among its installment partners. Consumers favor card-based BNPL offerings, according to a recent J.D. Power survey, although Citi ranks behind Amex and JPMorgan Chase, which also have installment options through their cards.
Flex Pay is also available through Citi’s mobile app and website, and at the point-of-sale at certain merchants. The tool allows the bank’s credit card customers to select one purchase of $75 or more at a time, and choose to pay for that purchase with fixed payments for a monthly fee instead of an annual percentage rate, Chwast said.
Flex Pay, launched in 2019, is built into the bank’s U.S. branded cards portfolio, which serves about 35 million accounts. The offering is available to accounts in good standing, which is the vast majority, Chwast said, without being more specific. Chwast declined to share figures illustrating how big the business is for Citi. Flex Pay sales have seen double-digit growth each year since launch, including a 25% jump from 2023 to 2024, a spokesperson said.
Editor’s note: This interview has been edited for clarity and brevity.
BANKING DIVE: Why is the Apple Pay development – and Flex Pay generally – important to the bank?
JEFF CHWAST: Consumers’ needs are always evolving, and in recent years, we’ve seen a preference for new types of borrowing and paying that is more controlled and transparent; customers feel more responsible about it than open-ended lending sometimes. Installment lending is not as large of a market in the U.S. as credit cards, but it’s meaningfully high and growing faster than credit cards. Flex Pay was launched so that we could address that emerging consumer need for transparency in borrowing.
As customer needs evolve, we want to be sure we’re offering a product that meets those needs, so they don’t go somewhere else. It’s a reason to use your card, it’s a reason to apply for the card, to pull your card out of your wallet, and tell your friends.
Which Citi customers are using this tool?
The appeal is broad, but it tends to be our more digitally engaged and digitally savvy, more loyal customers using it. Also, it’s generally customers who have a shorter-term revolve need, over two or three months. It’s that short-term payment flexibility type of customer.
I can’t share specific numbers, but we’re pleased with the growth rates. Expanding to our partner portfolios like Costco, as well as launching at the point of sale with partners like Apple Pay and Amazon has driven our growth.
Are the partnerships more about visibility, if customers can access Flex Pay through Citi’s app or website? Or are the tie-ups providing meaningful volume?
It is a healthy mix. We don’t need partnerships for customers to access it. They can access Flex Pay through the Citi app, on any merchant with the card itself. However, it is more convenient for customers and we do see a meaningful portion of our volume coming from our partnerships [he declined to provide figures]. We do see that as a big contributor to growth. The partners that we have are critical to our Flex Pay business.
For customers, partnerships offer convenience, because it’s at the point of sale, and value, if we have specific offers available. But it also creates awareness.
There’s no shortage of competitors in the installment lending arena. How is Citi approaching this differently than rivals?
Compared to the non-card offerings, like traditional BNPL, you can get access to Flex Pay with no application or credit inquiry, you get rewards as you do with your card. It’s already built in, not a separate bill, and it’s the protections and service of a bank that you trust.
As you compare us to some of our card competitors, we have a strong breadth of point-of-sale partnerships and we are one of the first major banks to launch with Apple Pay. We’re always thinking about ways to make the product work better for customers, as well as exploring new partnerships.
Did the bank see an opportunity to partner with Apple Pay after Apple ditched its own BNPL service in the U.S. last year?
I can’t speak to Apple sunsetting its own BNPL versus taking on partners, but they probably also recognize that customers trust financing from a bank.
