Lending

Synctera Line of Credit

Give your retail or business customers the ability to borrow on demand

A line of credit allows a borrower to utilize funds, as needed, up to a predetermined limit. The borrower may then repay the funds and borrow again as needed. Your retail customers may want to borrow money on demand to help smooth out variable income, pay for projects with hard-to-predict costs, or cover emergency expenses. Your business customers may want to borrow on demand to meet working capital needs, opportunistically expand their business, or cover unexpected expenses. A line of credit can meet the needs of both of these customer segments, and give them flexibility to transact via cash, a linked debit card, or ACH transfer.

Benefits

Provide a seamless customer experience for setting up checking accounts and lines of credit

Create stickier customer relationships and boost customer lifetime value by adding a lending product to your existing suite of offerings

Create a new revenue stream by charging a subscription fee or interest on the utilized funds

How it works

Synctera Line of Credit is a technology product that allows you to offer unsecured lines of credit to your customers. You are responsible for customer acquisition, experience, and engagement. Your bank partner is the lender of record.

You maintain a reserve account with your bank partner. The reserve account will be used to repurchase the utilized portion of the lines of credit from your bank partner.

Your customers apply for a line of credit - either on its own or combined with a linked checking account - through your app or website, in one seamless process.

Once Synctera successfully completes KYC/KYB, you evaluate the creditworthiness of the customer and establish a credit limit and repayment schedule.

Your customers can use their linked checking account to access their line of credit - funds are transferred to the checking account as needed. For lines of credit that are not linked to a checking account, your customers can do direct ACH transfers to their existing checking account.

Synctera will service the line of credit. On a monthly basis, Synctera will provide you with account statement details to send to your client; Synctera will process repayments from your clients.

Synctera Smart Card - Consumer

A convenient payment solution that allows your retail customers to manage spending while potentially earning better rewards than a debit card can provide

Synctera Smart Card (consumer) enables you to issue virtual and physical secured charge cards to your retail customers, and to process their transactions. 

Benefits

For you

• Enhance your overall value proposition
• Create stickier customer relationships and boost customer lifetime value
• Create a new revenue stream by earning interchange
  • Interchange fees on charge cards can be substantially higher than interchange fees on debit cards
  • Higher interchange rates give you more flexibility to offer attractive rewards to your customers

For your customers

• Greater convenience than debit cards (wider acceptance, lower hold amounts)
• Wider acceptance than prepaid cards
• Easy budgeting and spend management
• Credit building/rebuilding (with more access to funds than with a secured credit card)
• Potentially more attractive rewards than debit cards
• Potential to earn interest on the linked deposit account

Features

• Issue physical and/or virtual Mastercard-branded cards (other card networks are available; contact Synctera to learn more)
• Feature custom card art 
• Allow customers to add their card to digital wallets such as Apple Pay and Google Wallet
• 0% APR
• No credit decisioning or collections management required
• Your partner bank serves as the card issuer, holds linked account deposits, and facilitates all money movement
• This product is used in conjunction with ancillary Synctera services, including KYC, Ledger, External Account Verification, ACH, and Fraud

How it works

• The card’s available credit is equal to the available funds that the customer maintains in a linked deposit account
• As opposed to legacy secured credit cards, the account holder can withdraw money from the linked deposit account
• As the customer makes credit purchases on the card, an equal amount of funds in the linked deposit account are put on hold, and the card’s available credit decreases in tandem
• The cardholder must pay the card’s balance in full on the payment due date
• If the balance is not paid on time, funds on hold in the linked deposit account are used to settle the monthly statement

Credit Furnishment

Fintechs who offer credit products can opt to furnish the credit detials to credit bureaus. This is something that the fintech has to opt into and cannot be a fintech customer level opt in.

Once fintech opts into credit furnishment, Synctera I&O team will work with the bank and fintech to complete necessary documentation to be able to furnish to credit bureaus. We support Equifax, Experian and TransUnion but it varies by sponsor bank. 

Once all set up is done, at the end of every month Synctera will publish all credit information to the credit bureaus. 

Following information is what is published every month:

• Customer Account Number

• Date Opened

• Credit Limit

• Highest credit or original loan amount

• Frequency of payment

• Account Duration - For smart card we send it as 001 to indicate the full amount is due 

• Scheduled payment amount - This will be 0 for smart card because full balance is due

• Actual payment amount - Total dollar amount actually received for this reporting period.  It could be the aggregate/ sum of multiple payments but only the last one's date would be reporting in the date of last payment

• Account status - current, paid off, delinquent, charge off, paid charge off, delete request

• Prior 24 month account status history 

• Current balance

• Amount past due

• Original charge off amount

• Date closed

• Date of last payment  

Credit utilization is not reported to the credit bureaus by the data furnisher and is calculated by the bureau given the available information that is submitted on a monthly basis. The standard calculation is [(current balance) / (credit limit)] but different variables would be used if the credit limit is not provided and passed as a zero value.  The specific calculations are not publicly shared by the credit bureaus or model shops (Vantage/ FICO).  

Let’s take an example of  smart card:

• Account Opened: January 10th

• Original Balance on DDA: $500

• Amount spent on card in Jan: $100

• Available balance on DDA: $400

• Billing period: Jan 1st to 31st

• Statement generated on: Jan 31st

• Grace period: 21 days

• Due date: 21st Feb

• We report to the bureau on the 5th of every month

  • Feb 5th reporting info for the period Jan 1st to Jan 31st: 

    • Date opened : Jan 10th

    • Credit limit: 0 

    • Highest credit: $100

    • Frequency : Monthly

    • Duration: 1

    • Actual payment amount: $0

    • Current balance: $100

    • Date of last payment: None

Use case 1 - January statement amount was paid on / before the due date as highlighted below. 

• Feb 15th : $100 paid

• Available balance on DDA: $500

• Card balance: $0

• Feb 19th : Increased spend of $50 on card

• Billing period: Feb 1st to 29th

• Statement generated on: Feb 29th

• Grace period: 21 days

• Due date: 21st March

• We report to the bureau on the 5th of every month

  • March 5th reporting info for the period Feb 1st to Feb 29th: 

    • Date opened : Jan 10th

    • Credit limit: 0 

    • Highest credit: $100

    • Frequency : Monthly

    • Duration: 1

    • Actual payment amount: $100 

    • Current balance: $50

    • Date of last payment: Feb 15th

Use case 2 - January statement amount was not paid on / before the due date. 

• Available balance on DDA: $400

• Transactions between Feb 1st to Feb 21st : $50

• Card balance: $150

• Feb 22nd : Customer can’t spend more on the card since it’s past due and amount is not paid

• Billing period: Feb 1st to 29th

• Statement generated on: Feb 29th

• Grace period: 21 days

• Due date: 21st March

• We report to the bureau on the 5th of every month

  • March 5th reporting info: 

    • Date opened : Jan 10th

    • Credit limit: 0 

    • Highest credit: $150

    • Frequency : Monthly

    • Duration: 1

    • Actual payment amount: $0 

    • Current balance: $150

    • Date of last payment: None