Citi’s New Credit Card Perk Gives Amazon Edge in Winning Big Orders

(Bloomberg) -- Citigroup Inc. plans to let credit-card customers finance big purchases on Amazon.com over longer periods of time -- a deal that may spur sales at the e-commerce giant while boosting the bank's interest-bearing balances.

Cardholders who've shopped on Amazon in the past 12 months can choose to pay off transactions of at least $100 on a longer schedule and at a lower annual percentage rate, the lender said in an emailed statement. It's meant to give borrowers more options “given the current environment,” said Anand Selva, head of Citigroup's U.S. consumer bank.

“Customers get the choice,” he said in an interview.

For Amazon, it's a way to increase so-called basket size, making sales more profitable. It may also give the retailer another edge on competitors, emerging just days after Congress held a hearing to examine the clout that the company and other tech giants wield in U.S. commerce.

Citigroup has been looking at the $170 billion in lending balances its customers have with other banks, trying to find ways to earn more of that business, Selva said. A focus on Amazon makes sense: About one-third of Citigroup's active cardholders made at least one purchase on the site in the past year.

The new program is an expansion of the bank's Flex Pay program, which lets customers choose a single purchase and pay it down over time at a lower interest rate. The firm introduced the perk last year, and more than two-thirds of customers who have tried it have become repeat users. While customers have typically designated Flex Pay purchases days after making them, Amazon will offer the financing option at checkout.

On average, consumers use Flex Pay for purchases of about $900, Selva said.

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