Fintech newcomer Bread rises to the occasion reports that Bread has raised $126 million in an effort to fund big online purchases. The idea behind Bread is about online shopping. When consumers buy products online, the most commonly used method of payment is the conventional credit card. If it´s a larger purchase, consumers will usually pay the debt off over time, being charged interest for using their credit card.

Bread aims to get consumers to ditch their credit cards for a loan that has a lower interest rate and more predictable monthly payments. Bread raised it´s capital after a series B funding round. The boost in capital will help Bread get more online retailers on board with their funding plan.

The company was founded in 2014 in New York with the aim of providing funding solutions for companies who wish to supply more financing options to it´s customers. The reason why people would want to invest in this technology is simple: if people can pay for things over time, they are more likely to buy more things and at a higher price.

Healthy competition in the marketplace has seen that other companies are racing to provide similar services. Affirm, PayPal Credit, and Klarna are trying to offer finance on big-ticket items online. The difference with Bread is that they are trying to provide a more customisable finance option, dealing more directly with the brands, allowing them to use their own branding, rather than a third party. This is an effort to replace private-label credit cards that aim to build loyalty, such as Macy´s or Tiffany´s.

Bread co-founder and CEO Josh Abramowitz says “Private-label solutions were built for an earlier era. It’s quite striking that 20 years into the internet revolution so much of the core of banking has not yet changed.”

How it will work for retailers

The main aim with this technology is to give people a chance to make purchases and not have to deal with often expensive credit card rates. Retailers can choose their repayment parameters. They can set their interest rate from 0% to 29.99% and repayment times from 3 months to 48 months.

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