In the United Kingdom, Buy Now Pay Later (BNPL) has been creating huge waves. At a time when the BNPL concept has matured into an embedded digital payment and lending product that is in high demand and popular among both customers and merchants, Zilch, the London-based double unicorn, seems to be hit by the layoff trend.
As per the reports, London BNPL unicorn Zilch has hit the beginning of layoffs as the BNPL business is facing the impact of the recession and increasing interest rates.
Zilch announces over 10% layoff
The fintech company, valued at $2 billion after a funding round earlier this year, is all set to restructure itself. Apparently, there could be a layoff of dozens of staff, which amounts to over 10% of its total workforce. Reportedly, new recruits who were to join the firm are having their offers rescinded as the company plans to reduce the headcount.
As per an ex-employee on the online job board Glassdoor, the company follows bad morale as a result of the layoffs, which is said to exceed 30. Another person involved in staff resourcing was reportedly frozen out of the work email account mid-way while recruiting new employees. The employee was also forced to explain the redundancy situation to a new recruit via LinkedIn messages.
As per data from LinkedIn, the number of staff at Zilch has reduced from earlier this year and the hiring in November was at an all-time low. Despite this, the report notes that Zilch was planning to hire 20 people into new roles while a consultation process over the redundancy programme was in progress.
A spokesperson for Zilch said, “In just 24 months since launch, Zilch has created over 250 new jobs, gained millions of customers at record speed and recently turned gross profitable. But in the last year the world has changed, and any business that thinks it’s immune to this historic economic change is mistaken. With millions of customers depending on us, we must continue to drive towards bottom-line profitability. We are shifting our priorities from high growth towards even greater product development and innovation, and as part of this strategic shift in focus, we are planning to hire around 20 people into new positions alongside the ongoing collective consultation process for certain roles that have been placed at risk, resulting in a relatively small net adjustment to our total headcount.”
BNPL under depression
The BNPL sector is one of the fast-growing sectors that has been hit by the consumer downturn. In addition, there is an increased cost of finance, which is used to fund interest-free credit that is offered to shoppers.
Besides Zilch, its rival Klarna from Sweden has seen its valuation drop by 85%, which went from $45.6 billion to $6.7 billion a few months back. This plunge was a result of investors weighing the prospects for the firm after higher interest rates took a toll on its profits. Earlier, the Swedish fintech giant also announced layoffs to cut costs.
Zilch: London’s double unicorn
Founded by Philip Belamant, Zilch is a buy now, pay later app that allows its customers to shop wherever Mastercard is accepted. Zilch’s users can keep track of all their purchases in one place – whether made online or in-store – ensuring they have a transparent view of their finances and their repayment timelines. The platform that turned out to be Europe’s fastest double unicorn with $2bn valuation also ensures responsible lending by combining Open Banking technology with soft credit checks to build a personalised affordability profile for each customer.
