After some further research and interpretation of Tina’s cryptic clues I can say with confidence, I have strong reason to believe Splitit and AmericanExpress are in advanced negotiations. My analysis as follows:
1. Brad has made no secret that Splitit’s strategy is to penetrate the US market. American Express boasts the highest purchase volume of credit cards in the US at ~$755b. This is important as purchase volume is what will make SPT profitable.
2. Merchant funding facility - American Express, as opposed to Visa and Amex, is a payment processor and card issuer. Further to this, American Express offers numerous corporate banking products to its corporate card holders such as Business Loans and most importantly - merchant financing. This is crucial as it could be the missing piece in Splitit’s puzzle. More on this later.
3. American Express is most suited to Splitit’s AOV and target customer for a number of reasons. Rewards points, luxury goods etc...
4. Amex has recently shown an appetite for BNPL (Afterpay now accepts Amex). Also see point 5.
5. Whilst Amex has their own version of Instalments in “Plan it” it has numerous limitations. They require a significant monthly fee (~12.5%pa) as they are not making a similar merchant fee like the other BNPL. This is where SPT works so well as both of these become redundant.
Now back to merchant funding facility. This is where I see the stars align. What if Amex could offer merchants who enrol to this SPT integrated product the upfront funding at POS? Amex then puts the hold on the customers card and takes out the monthly instalments. Amex are then taking a higher fee from the merchant and guaranteeing the transaction occurs on the Amex card. It’s a win win. There is little risk as they have already approved the customers credit limit.
As Visa and MasterCard are not a “bank” they don’t have the facility available to fund the merchant. This is why SPTs technology is the perfect fit for Amex.
SPT’s technology gives Amex the competitive advantage to dominate the card based BNPL space. As a result, Amex would open SPT up to millions of merchants and card holders.
If AMEX is not the one then Discover is the next obvious answer for similar reasons pointed out above.
Is this why we have not had a material update on Visa and MasterCard? Is this why we have not heard any major new merchants?
In future, will any Amex holder be able to split their purchase over interest-free monthly instalments at any merchant accepting Amex cards?
Disclaimer - this is all IMO.
VAMOS SPT.
SPT Price at posting:
$1.14 Sentiment: Buy Disclosure: Held
