If you feel the need to keep up with cutting-edge video game hardware, 2020 is a rough year thanks to the PlayStation 5, Xbox Series X, and Nvidia’s RTX 3080 GPU. That’s especially true if the pandemic has put a dent in your income. Saving up $500 to purchase an Xbox or PS5 may prove difficult. But that’s where QuadPay wants to step in and act as a budgeting tool for consumers. QuadPay is one of the new purchasing options that is available at GameStop this holiday. It’s a payment plan that breaks up your purchase into four payments that you pay over the course of six weeks. And that might sound like a shady deal that must come with interest and a ding against your credit, but QuadPay chief executive officer Brad Lidenberg talked with How Games Make Money host Jeff Grubb to clear up the confusion about those points. You can listen to the episode below or by clicking on the video above:
This kind of installment plan is really only novel in the United States. It’s much more popular in Europe and Australia where companies like Klarna and AfterPay enable consumers to make big purchases by breaking up payments into chunks. The idea is that you might go into a store and make a purchase on your pay day. On that day, you would pay a quarter of the total, and then you’d pay another 25% of the total price every two weeks. Ideally, this would line up with your paycheck.
What about interest?
But you’re going to have to pay interest to QuadPay, right? That’s actually not the case because QuadPay’s real customer is the store.
“I don’t really want to get into the deal construct, but it’s sufficient to say that the merchant is paying the fee,” Lindenberg told GamesBeat. “So if you go and you want to buy something for $200 on GameStop.com, you’re going to pay four installments of $50 over six weeks. And so the sticker price that you’re seeing on the product is still the same price that you end up paying. And what that really does is it benefits the merchant and the consumer. It’s a real win-win win.”
Lindenberg says it’s a win for QuadPay because it gets its fee and a new customer. It’s a win for the consumer because it can help you budget without charging you a premium. And it’s a win for the merchant because it enables more consumers to spend more money.
“The consumer can now afford to spend a bit more, so typically we see a lift in average order value,” said Lindenberg. “We see an average increase in the 40% range. And then you also see the consumer buying something today versus putting it off where they may have delayed that purchase because they were still saving.”
QuadPay doesn’t hit your credit
QuadPay is an Australian company. And while they do have credit scores in Australia, it’s not really as life-defining as it is in the United States. Likely because of that difference in culture, Lindenberg is not interested in hurting your credit.
“QuadPay doesn’t affect your credit,” he said. “We do a soft credit check at the time of purchase, but it really is just a soft pull as one of the sort of data points that we use to decide whether we approve you to use QuadPay. But we will not report back to the bureau’s if you if you’re late.”
The company didn’t design its business to punish people who fail to pay. It actually works the other way around. QuadPay wants you to keep coming back. They want you to have a good experience free from the kinds of stress that can come with strict financing and hits against your credit. So if you fail to pay, QuadPay will simply prevent you from using its service again. Then if you want to make another purchase using QuadPay, you’ll just need to finish paying off your original balance.
“You know, we don’t we don’t think that a purchase of a PlayStation or purchase of a videogame should affect something like [your ability to get] a student loan,” said Lindenberg. “They’re very different. And particularly Millennials are quite sensitive to anything that can affect their credit, so you know that’s also one of the reasons why this construct is becoming so popular.”