Need credit? Let’s look at your web cookies

Need a loan? Your web cookies might get you one.

In the past few years, banks and other lenders have been developing faster and more convenient ways for issuing credit to consumers. Typically, they have lent cash through loans, mortgages, or credit cards. The latter is an example of “point-of-purchase” (or “point-of-sale”) credit. Lending-industry entrepreneurs, riding the success of online shopping sites such as Amazon and eBay, are using new platforms to streamline point-of-purchase lending — sans credit card.

Klarna, a Sweden-based bank, entered the market in 2005. Four years later, after receiving funding for its point-of-sale loan software, the bank took off , gaining 50,000 business customers and 35 million borrowers by 2015, while expanding internationally.

Klarna partners with businesses by providing its clients’ customers with credit. When a customer makes his purchase, he has the option of paying through more regular means or by borrowing from Klarna. The bank investigates the prospective borrower’s creditworthiness by looking at, of all things, his web cookies. A computer considers the item being purchased in context of what it finds in the cookies, deciding almost instantaneously whether to lend money. To begin this process, Klarna asks only for an email address and a mailing address.

Another point-of-sale innovator is Divido, a U.K.-based firm. Like Klarna, Divido also partners with businesses to provide customers with credit. Otherwise, Divido’s model is quite different.

Instead of actually loaning the money, Dividois the middleman connecting consumers to lenders (similar to how websites like Travelocity or Kayak connect travelers to airplane tickets). Rather than web cookies, Divido uses a person’s credit score to connect a borrower with a lender. Divido also says that it provides alternative lending options if a consumer fails to find a loan through its system. Notable investors in Divido include MasterCard and American Express.

Point-of-purchase credit platforms do away with the need to type in credit card numbers at check out. Some also provide payment plans that are interest-free. To make money, point-of-sale platforms charge fees to their business partners. Divido, for its part, says customers are more likely to make more and larger purchases if they have access to credit. As part of a promotion, Divido guarantees to qualifying business customers that they will see a 20 percent increase in sales revenue or average order value after they start using Divido. If those numbers are not reached, Divido will reimburse its fees for the first six months.

The internet has made shopping much easier. Now it’s making borrowing easier, too.


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