CASE STUDY: Amex Pay It Plan It shows how flexible, digital financing could help issuers attract and engage younger users

Credit appetite is at an all-time high in the US, thanks to a bump in consumer confidence that's leading to increased willingness to spend. That's been a boon to issuers — but it's also been costly, because banks are aggressively investing to chase new customers and create new products that help attract them

Business Insider looked into Pay It Plan It — two of Amex's complementary offerings available to cardholders that increase payment flexibility for users — to gain insight into their efficacy in attracting millennial customers, who are a key target for card players.

For context, Pay It allows cardholders to pay off low-value purchases immediately within their mobile app as a way of freeing up available credit, and Plan It offers fixed-fee, interest-free payment plans for qualifying purchases above $100.

Challenge

American Express needed to reinvigorate its business following the 2016 sale of the Costco cobrand, which represented 8% of the company's $1 trillion billed business. A key strategy was to focus on new customer acquisition — and attract high-growth potential customer groups who may not have previously considered Amex — as a way of bolstering new growth.

One such group was millennials, who are less likely than other generations to have a credit card and particularly apt to value offerings that Amex sees as strengths, like rewards. But the space is competitive, thanks to popular cards like Chase Sapphire Reserve, which means that Amex needed to differentiate and launch features that complement its robust rewards program to help it stand out from other providers looking to attract a similar group.

Strategy

Offering flexible payment options to cardholders could be one way to attract and engage younger users. Amex has been looking to offer products that cater to "a lot of different customers," including millennials, who value flexible payment options — 60% of millennials are interested in noncredit card financing options for big purchases, a figure well above the 42% of the general population that feels the same way.

Amex could have opted to play into that interest by launching Pay It Plan It for cardholders with the majority of its products, including cobrands, as a way of giving users a more tailored subset of payment options beyond either paying cards off in full or carrying a balance that amasses interest. By increasing flexibility, Amex could encourage millennial users to pick up its credit cards, and spend more on them rather than using other payment methods or those from competitors.

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