PaySwag Offers Special Bonuses for Subprime Borrowers

Sometimes mobile payment apps can offer special benefits for the user as well as for the vendor, and that’s when things get really interesting.

We’re all familiar with rewards programs, but PaySwag takes user reward to a whole new level by offering rewards for making payments on loans.

PaySwag itself is a white-label mobile app that’s specifically geared toward the subprime borrower or otherwise underbanked, those who have no bank account at all.

Those folks number about 100 million in the United States alone, at last report, so offering up a program specifically geared toward them could produce some terrific results.

Basically, the concept is almost shockingly simple, and turns, for example, a 7-Eleven into a loan processing operation.

Car Loans Inc. joined up with PaySwag on its pilot program, and gave users the option to make a loan payment by going to a 7-Eleven and offering up their mobile app, which presented a barcode. Users could then make the payment, and the 7-Eleven clerk could ring it up in the same way he or she rung up a gift card.

Those who paid in such a fashion would then earn points, which were in turn good for Amazon gift cards, Redbox rentals, or other such rewards.

The benefits were huge for Car Loans Inc., too; Severely delinquent loans fell by half, and just over half—52 percent—of PaySwag points were awarded specifically for consistent on-time payments, meaning users were paying back loans with impressive rapidity.

There were even methods for borrowers to file requests for extensions, due to some specific standards, including medical emergency, car repair, and even some things out of the user’s control like a late paycheck or a lost job.

Right now, conventional mortgage or car loan holders are probably about ready to chew nails, because they’ve been making payments, potentially for years, without so much as a thank you card from their traditional bank.

This may well force some banks to make some changes, lest a whole lot of loan business proceed to subprime borrowing sources. Will subprime borrowers be able to get loans to begin with if suddenly all that business is taken up by prime borrowers?

It’s an exciting idea, and one that mobile payments is helping to make happen. Regular banks may need to take note, or new losses may be afoot.