Citi blurs the line between credit cards and BNPL solutions with new Spot card

The news: Citi will launch a buy now, pay later (BNPL) card dubbed Spot in Australia through a partnership with Diners Club, per PYMNTS.

How it works: The card can be used online or in-store anywhere Mastercard is accepted and lets customers pay for purchases in four interest-free biweekly installments. For purchases above $200, customers can split repayment into eight installments for a $10 flat fee. Unlike Citi’s existing lending solution, Flex Pay, Spot bears no interest. Flex Pay can also only be used for Amazon purchases or applied to past transactions.

Why it’s worth watching: BNPL products gobbled up payments volume during the pandemic, and recent moves from big-name companies suggest that activity won't slow down any time soon.

• BigCommerce made Sezzle its preferred BNPL partner this week—bringing the solution to its more than 60,000 merchants. And Apple partnered with Affirm so Canadian customers can pay for Apple products through the BNPL provider.
• Credit card issuers suffer the most as demand for BNPL offerings from incumbent players like Klarna and Afterpay grows—which may have informed Citi’s decision to move further into the BNPL space.

Why this could succeed: Unlike many BNPL providers, Citi doesn’t have to worry about forging retail partnerships because its card can be accepted at most points-of-sale.

This makes Citi a formidable player in the BNPL space, especially in Australia—where BNPL services are extremely popular: 48% of Australian internet users reported using a BNPL service in the past 12 months, per an April 2021 Leger survey.

Customers may be more inclined to use the Spot card over other BNPL offerings. Card-based solutions are easy to use and offer a more streamlined payment process compared with many incumbent BNPL providers, which include approval processes and can require using third-party mobile apps for in-store purchases.

What’s next? Citi will likely bring the Spot card to other markets if it’s well-received in Australia, and the newest iteration of BNPL solutions could shake up the global installment lending landscape. Issuers that aren’t already involved in the BNPL space—like Capital One, which has a strained history with BNPL services—might follow Citi’s lead with their own BNPL card launches.