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Case Study

How Perpay removed friction from its customer journey using Pinwheel

How Perpay removed friction from its customer journey using Pinwheel
Case Study

How Perpay removed friction from its customer journey using Pinwheel

Challenge

Perpay spent five years working to understand payroll systems to make it easier for its customers to repay their purchases directly from their paychecks.

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Solution

Pinwheel's paycheck linked lending solution removed friction from Perpay's customer journey, leading to increased conversion and repayment rates.

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Perpay is a fast-growing ecommerce marketplace that allows shoppers to “buy now, pay later” with automatic repayments. The repayments are made directly from the customer’s paycheck, so they can relax knowing they won’t accidentally miss a payment. Plus, they can build their credit at the same time.

Buy Now, Pay Later (BNPL) is a popular lending solution used by more than one-third of Americans. Shoppers use it to avoid credit card fees and spread out the costs of purchases over several weeks or months. It helps them afford things they want or need without having to cut corners elsewhere — an important solution, considering 42% of working Americans feel “somewhat or very financially insecure.”

BNPL solutions are seamlessly integrated at checkout, so consumers experience little friction in the process of using it as a payment method. Perpay also wanted to enable its customers to connect to their payroll platform and set up paycheck-linked repayments with as little friction as possible. However, their manual process could only go so far. To take their BNPL solution to the next level, Perpay joined with Pinwheel to integrate its payroll data connectivity API.

Perpay spent years trying to manually integrate with payroll systems

Prior to working with Pinwheel, Perpay spent five years working to understand payroll systems to make it easier for its customers to repay their purchases directly from their paychecks.

Originally, the company leveraged employee self-service (ESS) portals to allow customers to manually set up direct deposits that would pay off their purchases. (ESS portals enable employees to carry out tasks they previously relied on HR to do, such as updating their personal information.)

Although Perpay saw good results with ESS, they wanted to completely automate the process. The company already “knew so much about how payroll systems work and integrations, but it was all manual for the user” explains Chris DiMarco, founder and CEO of Perpay. And Pinwheel’s payroll data connectivity solution was “an extension of the vision that Perpay already had.”

Pinwheel took care of connecting Perpay to payroll systems

With the help of Pinwheel’s paycheck linked lending solution, Perpay enables its customers to connect to their payroll or income platform with just a few clicks and set up automatic repayments.

All customers need to do is log in using their payroll credentials and permit the API to set up a direct deposit that goes toward repaying their purchase. The entire process takes place on the Perpay platform, allowing for a smooth customer journey and minimizing the risk of shoppers abandoning their carts.

Through Pinwheel’s API, Perpay is connected to 1,500 income platforms (which is 3x the industry average) that cover more than 80% of paid Americans, including gig and creator economy workers. The high level of coverage ensures that Perpay can serve its customers regardless of how they get paid.

One of Perpay’s goals is to help people with a subprime credit score or no score build their credit rating and become eligible for better credit products. Pinwheel’s API allows Perpay to fulfill this goal by providing it with data it can use to verify the customer’s income and employment. Thanks to in-depth payroll data, Perpay can make sure a customer is eligible to make purchases on its online marketplace regardless of their credit score. At the same time, it can verify the customer’s identity to lower the risk of fraud.

With recurring access to income and employment data, Perpay is able to proactively respond to any changes in its customers’ employment status. And direct deposit allocation monitoring allows the team to understand who the other financial service providers are that their customers are using. These features provide Perpay with a deep level of insights it can leverage to better understand its customers’ needs.

With Pinwheel, Perpay increases conversion and repayment rates

Perpay saw numerous benefits shortly after implementing Pinwheel’s payroll data connectivity API.

When we first launched with Pinwheel, improving the direct deposit setup process was a way for us to increase conversion rates with first-time customers. That lowered our acquisition costs and it also increased the speed of conversion. One thing that people don’t necessarily recognize in the market is that payroll systems work on cycles, which can take time. Some people get paid once every two weeks, and some people get paid once a month, or weekly. Either way, it’s a lot slower than a transaction on Amazon. Pinwheel shortened the time from approval to repayment, which dramatically improved the user experience,” says DiMarco. Meanwhile, repayment rates also grew 3x.

Once the Perpay team converts first-time customers, its goal is to retain them. With Pinwheel’s recurring access feature that allows the monitoring of direct deposits and income and employment, Perpay is now able to retain customers at a higher rate. “Pinwheel is not just with you to help acquire customers; they’re with you to maintain and improve retention. That will be the differentiator with Pinwheel in the long term because there are only so many conversions you can have. But if you can monitor and improve retention, that’s going to be really impactful,” explains DiMarco.

But this is not the end of the partnership. After having so much success with Pinwheel’s paycheck linked lending solution, Perpay has decided to leverage our API to build an entirely new product. It will be a “Pinwheel-only enabled product,” says DiMarco, which is a reflection of “the confidence that we have in Pinwheel.” Stay tuned to see what other exciting use cases will arise from a single payroll API.