Synchrony sees demand grow for car care financing

STAMFORD, Conn. — Credit card use and payment installment plans are growing in popularity, especially as tires and automotive services get more expensive.

Synchrony Financial is promoting its private label Synchrony Car Care card to tire dealerships and auto repair shops as a way to attract and retain customers with a dedicated credit line and a six- or 12-month no-interest payment option.

"One of the things we've seen is that people need credit now more than ever," said Steve Roe, Synchrony's senior vice president, auto leader, home and auto.

"We realize that today's consumer, more than ever, needs a way to pay for their purchases, whether it's an acute need like a tire goes out or a routine maintenance. And we've seen time and time again that consumers want a way to pay over time and that's what consumer financing helps them do," he said.

Roe noted that furniture stores have been offering financing on large pieces of furniture for years.

"That is one of the reasons why we're investing more and more in auto to get the industry to be more aware of the power of financing and how it can not only drive that first purchase of a higher ticket but repeat (purchases)," he said.

"We continue to see lots more adoption of financing because not only are consumers getting more sophisticated, the dealers are getting more sophisticated, too. And the pandemic has driven a lot of that where the partners, the locations, are really looking for not only this easier consumer experience, but whatever they can do to close the sales of consumers that come in their shop and make sure they come back again," he said.

"So if anything, the pandemic has actually enhanced the demand for credit and interest that shops have in it. We have a very robust process to get merchants up to speed and comfortable offering credit throughout their respective consumer experiences. That's one thing that Synchrony really differentiates on is having a very robust onboarding and training program to help merchants get the most out of credit."

Synchrony offers credit card programs through a variety of industries, including the auto service aftermarket.

The Synchrony Car Care card traces its roots to the former CarCareOne credit card 35 years ago. The card was rebranded when Synchrony separated from GE Capital in 2015.

The program, with nearly 5 million cardholders, has grown to 1 million auto-related merchant locations nationwide, from 25,000, in the past four years, the company said.

Some of its major partners include Discount Tire, Pep Boys and NAPA AutoCare Centers. The credit card program is available for businesses with one location or multiple locations, he said.

"One thing that helps tire businesses a lot is not only does it help the consumer make the initial purchase and help them afford it more easily with whatever budget they have — so they can buy four tires instead of the one that may have blown out — it allows them to have a way to pay for all of their car care needs over time," he said, adding, "There is a much higher incidence of repeat sales when they have a line of credit as well."

Three primary benefits shops enjoy from offering a private-label credit card, that often is embossed with the shop's name, is: it can increase the chance of the consumer agreeing to the shop's recommendation of repairs; it can increase the size of the purchase because the card gives the consumer more buying power; and the consumer tends to return to the store to buy more often, Mr. Roe said.

The company said the average Synchrony Car Care first purchase is $916 and claims about 80% of sales on the credit cards are repeat purchases.

Last year Synchrony expanded its Car Care card to be accepted at all automotive-related participating locations.

"We've now extended the network opportunity to have acceptance at all auto retailers nationwide, including parts, tires, dealerships, gas stations, car washes, ride share and recently even insurance," Mr. Roe said.

He said having a dedicated car care credit card is an advantage because some consumers may not have enough credit balance on their general credit card or they don't have another card or the other cards don't offer six-month (or even 12-month), no-interest financing.

The card is embossed with the shop's name and Synchrony Car Care logo for use in the network. Since Synchrony is partnered with Discover Card, the Car Care card is accepted wherever Discover is accepted within the automotive segments.

"That really broadens the appeal because they can use it for gas, they can use it for tolls, they can use it for car washes. And that higher frequency of purchase keeps the card top of mind so they're more likely to go back to the merchant where they originally got the card. It's in their wallet, it's not in their drawer," he said.

Merchants pay a processing fee, which varies based on situation and affiliation, for the six-month, 12-month or 18-month financing option. The six-month financing is automatically available on all purchases over $199. Merchants can opt to offer the longer financing options for promotional periods.

In addition to the credit financing, Synchrony said it offers businesses turnkey tools to manage, market and grow their businesses, including:

• An online business center for all consumer financing sales and operational tools;
• A learning center for employees to learn about completing credit applications, with training videos, PDFs and self-paced online courses;
• An advertising center to help drive more traffic online and in store by helping merchants create personalized in-store materials and online assets, including signage and banners;
• Synchrony CONNECT, which offers webinars, special events, one-on-one consulting opportunities, marketing and operational leadership advice;
• Synchrony Ignite, an online rewards program to encourage store employees to promote the credit cards; and
• MobileID, that enables consumers to apply for credit through their phone, minimizing the amount of information consumers need to manually input and to create a faster approval process.

Synchrony noted several credit trends based on its most recent biennial Major Purchase Journey Study, in which the company surveyed nearly 4,000 Synchrony cardholders and non-cardholders who made a purchase of $500 or more in the past six months across a dozen categories.

Among the findings were:

• 32% of automotive consumers said the pandemic has changed the way they will shop for major purchases in the future;
• 64% said the in-store experience is an essential part of the shopping experience and 60% prefer to shop local;
• 58% of shoppers conducted research via the retailer website, 53% via a search engine, 28% via a ratings/reviews/comparison website, and 12% via a mobile app;
• 65% made a payment method decision before shopping and 73% are comfortable financing through a retailer-specific credit card; and
• Financing prompted Synchrony cardholders to spend 17% more than non-Synchrony cardholders.

"Consumers are more sophisticated than ever. They're researching things on their phones or online before they go to shops more than ever," Mr. Roe said.

"The consumer experience is more important than ever and things like contactless (transactions) are much more important in a post-pandemic world."

In October, Synchrony expanded its partnership with Fiserv Inc., a provider of payments and financial services technologies, so that small businesses will now be able to access Synchrony products and services and accept private-label credit card payments via the Clover point-of-sale and business management platform from Fiserv, which enables consumers to pay with a mobile app.

"The availability of Synchrony's capabilities and products via the Clover App Market will help Synchrony's merchants attract more customers and drive more revenue through a broad suite of financing products," the company said, noting that Express Oil Change & Tire Engineers plans to use a combination of Synchrony and the Clover platform to serve the customers they already have as well as attract new ones.