Isracard continues to look for new growth engines: establishes a joint venture to provide consumer credit

The credit card company Isracard continues to look for new growth engines after its separation from Bank Hapoalim. Isracard, which is in a period of transition ahead of the inauguration of the new CEO Ran Oz in place of Ron Wexler, announced the signing of an agreement to establish a joint venture to provide consumer credit at points of sale throughout the country. In the world.
Isracard will initially hold 19.9% ​​of the shares in the new venture, with an option to increase its share later on to a rate of 49.9%. Isracard's partner in the launch of the project is a group of well-known entrepreneurs in the fields of consumer credit in Israel, led by Rafi Gamish, CEO of the College of Management.
The partners undertook to invest initial sums in the company that would enable it to meet the equity requirements required to obtain a license from the Capital Market Authority. In addition, Isracard will provide the company with an owner loan and financing in the amount of up to NIS 300 million.
The new company will provide consumer credit with a leasing model for purchasing home products. Accordingly, customers will be able to purchase a package of household products, such as electrical appliances, and pay a fixed and known monthly payment in advance so that this does not hurt the credit score on their credit card. In addition, a longer payment spread will be possible compared to other solutions currently on the market.
At the end of the period, customers will be able to choose whether to keep the devices they have purchased, and accordingly complete the transaction - or replace some or all of the products with new products, and start another period of payments. In the first phase, Isracard intends to launch the new activity at a limited number of selected points of sale, alongside online sales sites.
The credit method at points of sale, which flourished during the Corona period around the world, is not yet popular in Israel. These are apps that offer the service, also known as "Buy Now, Pay Later" (BNPL - Buy Now Pay Later) and actually allow for payment spreads. The most popular apps in the world - including the Swedish company Clarna, the American company Affirm and the Australian AfterPay (recently acquired by Square) - offer buyers the option to spread the transaction for payments through a third-party loan, which fintech companies provide in seconds. These apps attract many customers because they allow instant payments on favorable terms and in many cases without interest, and because they are also available to those who do not have a credit card.
In Israel, their use has been less common so far, partly due to the fact that credit cards allow for a free postponement of payment, of about two weeks on average (while in the US, for example, most debit cards are debit cards), and there is also a practice of spread payments. The business allows for free - and those who do not, uses spread payments in interest (ie, credit). Therefore, credit transactions at the point of sale have so far been made in Israel mainly in the car market, in particularly high amounts. ERN, and they have extended the use of this type of credit to smaller purchases as well.