A fintech startup has developed an alternative to typical buy now/pay later loans that it says will be safer and more rewarding for consumers.

Accrue Savings, based in New York, launched a savings account Wednesday that will be offered initially through seven retailers such as Camp, Casper and Mark Henry. Each will decide how to market Accrue to customers and for which products it will be available.

Consumers can always save for large purchases in a regular savings account. But Accrue Savings offers bonus rewards through retailers, says Michael Hershfield, founder and CEO of Accrue Savings.

“There is an unrealized opportunity when so much innovation has been focused around credit,” Accrue CEO Michael Hershfield said.

When consumers locate an eligible item they want to buy, they can choose a savings schedule, link their bank account and set up an Accrue Savings account. A dashboard will track their progress toward the purchase price. Once they hit that amount, Accrue will send them a debit card that is tied to that retailer and purchase.

Hershfield said that consumer research he conducted before launching Accrue revealed that Americans want to save. “This is here for retailers to offer payment diversity,” he said. “Not everyone wants to buy today. Many people are thinking about buying things six to nine months from now.”

To be sure, customers can accumulate cash in traditional savings accounts. But Hershfield argues there are advantages to choosing Accrue. Retailers will incentivize saving by offering cash rewards — for instance, bonuses when customers have reached 25%, 50% or 75% of their goals. Also, users can send family and friends a link to their Accrue “wallet” to request additional contributions.

This process is also meant to be safer than buy now/pay later loans. On Tuesday, House Democrats voiced concerns about installment lending, which puts consumers at risk of falling behind on loan payments. There are no fees attached to Accrue accounts, and users can withdraw their principal (but not the additional rewards from the retailer) and transfer the money back to a regular bank account at any point.

Accrue raised $4.7 million in a seed funding round and is backed by investors including Twelve Below, Box Group, Ground Up Ventures, Red Sea Ventures, Good Friends and more. The company will make money from interchange fees when customers put their Accrue debit cards to use, as well as a performance fee it charges to retailers when customers make a purchase. The deposits are insured by Blue Ridge Bankshares, a $2.8 billion-asset company in Charlottesville, Virginia.



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