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Upgrade CEO details how company is disrupting the ‘buy now, pay later’ space

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Upgrade Co-Founder and CEO Renaud LaPlanche sits down with Yahoo Finance Live to discuss Apple's emerging buy now, pay later services and the fintech landscape that prioritizes user flexibility.

Video Transcript


- Apple announcing a new software update features at its Worldwide Developers Conference. And one new product that's getting a ton of buzz is Apple Pay Later. That's the company's entry into the growing buy now, pay later space. Well, joining us now is "Yahoo Finance's" Senior Tech Reporter, Allie Garfinkle, along with the Renaud LaPlanche, CEO of Upgrade. Now, Renaud, you say that Upgrade is a buy now, pay later alternative. So, what makes Upgrade different from what's already out there?

RENAUD LAPLANCHE: You know, so, Upgrade is using a more common form factor, which is a credit card. Upgrade card is in fact, the fastest growing credit card in America, or in the top 25 credit card issuers in the country. And what makes it unique is instead of providing this revolving credit that sometimes sort of trick users into carrying over their debt month over month, like-- like, traditional credit cards do, our credit card effectively provides an installment plan, as we can use your Upgrade card at any store.

It comes with a line of credit, like any other credit card. At the end of each month, the balance turns into an installment plan. So, you sort of have to pay down every month for principal and interest. So, it brings more discipline and lower cost.

So, it's sort of the similar ideas as BNP, as buy now, pay later, in the sense that you are turning one large purchase into a series of smaller installments. But the credit card goes longer term and larger purchases than-- than buy now, pay later, and is available at millions of merchants.

ALEXANDRA GARFINKLE: So Renaud, thank you so much for joining us. You have this background in fintech that goes further back than a lot of people who are currently working in fintech. So, I was curious about your take. For a large company, like Apple, what is the appeal of getting further into fintech?

RENAUD LAPLANCHE: You know, so, hey, it's another way to monetize a very large user base. I think Apple Pay, as a product, launched in 2014. I think the latest number is about 6% of iPhone users use Apple Pay in store. So, it hasn't had the broad adoption that Apple was hoping for. But maybe with that sort of credit facility that Apple Pay, and for their partner bank, Goldman Sachs, is providing to their users the ability to pay in four installments over six weeks. That could be providing a boost to the Apple Pay product.

- So, Renaud, what does having some of these large corporations and banks, you have Mastercard, PayPal, Goldman Sachs, and of course, Apple getting into this space. What does this mean for Upgrade's growth and the sort of competition in this space?

RENAUD LAPLANCHE: Well, I think there's plenty of room for a lot of product innovation and different use cases. I think BNPL, which is like what Apple Pay Later does, is really sort of targeting smaller purchases, a shorter term. So, you can pay for a $200 purchase over the next six weeks, which is a really good source of flexibility provided to users.

While credit cards in general, in Apple and Upgrade card, really provide the ability to be more flexible. You can make larger expenses. It's a true sort of line of credit. You can make the payment over two or three years. So, it's different use case. And I think both of them are useful to consumers.

ALEXANDRA GARFINKLE: Renaud, you know, the world of buy now, pay later users has really been growing and is projected to keep growing massively through at least 2024. And fintech adoption more broadly among consumers has also really expanded. So, can you talk to me a little bit about what you think is driving the appeal of fintech in general to consumers and buy now, pay later? You talk about flexibility, but I'd be curious to spin that out a little bit.

RENAUD LAPLANCHE: Yeah, I mean, it's-- you've seen a lot of product innovation in the space. That's really what fintech is about and why fintech is gaining so much market share against traditional banks, and why Upgrade card is the fastest growing credit card in America. There's a lot of sort of new flexibility or lower cost that did not exist in the past.

I mean, with BNPL, you can spread your payments over six or eight weeks with no-- no interest. So, it's a good service to consumers. A good way to sort of get that flexibility of spreading the payments in a larger fallout-- to pay for a larger purchase.

Or we have a great card or getting all the benefits of a credit card, but we have a more disciplined approach and a lower cost than traditional credit cards with no fees, lower interest rates. So, I think all this product innovation coming from fintech or from tech companies, like Apple, is really sort of driving sort of more usage, but also taking market share away from traditional banks.

- We do thank you for your insights. Renaud LaPlanche, the CEO of Upgrade. And "Yahoo Finance's" own, Allie Garfinkle.