Zilch, the London-based Buy Now, Pay Later (BNPL) platform, is building on its rapid UK growth and success with a US launch and a partnership with Experian to help it reinvent credit and save users millions of dollars.
Buy Now, Pay Later (BNPL) has become a standard feature of online retail, with several logos appearing next to the more traditional payment methods. However, the double unicorn is seeking to create ‘BNPL 2.0’ by partnering directly with the consumer. By doing this, along with their partnership with Mastercard, they empower customers to take advantage of the perks traditionally associated with credit cards, like flexible payment or cash-back, with almost every purchase. Zilch’s CEO and co-founder, Philip Belamant, joined TFN to share what makes Zilch different, and their plans for the US market.
An industry without innovation
The credit industry has seen little innovation since the first credit cards in the 1950s. While some processes may have changed — an interview with the bank manager is now an online application and credit check — the net result is the same: revolving credit with a limit based on a single point in time that does not change to match circumstances.
“Here we are, almost 80 years later,” says Belamant, “and revolving credit cards are the same. That’s why the UK alone has more than £60 billion on credit cards, and the US is about to hit a trillion dollars again. We looked at that and asked, ‘isn’t there a better way?’”
Zilch takes a different approach, assessing not just data from Experian, but adding open banking data and affordability data to reassess credit with every transaction. “Every time you swipe, every time you tap, we’re updating our view and therefore can offer you more, or say that you should spend less,” Belamant explains. “We weave that data into what we’re doing, so we have a 360-degree view of our customers. We think that’s critical to our success so far.”
And Zilch has seen massive success in the UK. Since it was launched in September 2020, Zilch has grown to over two million customers in the UK, adding 250 thousand users a month. Valued at more than $2 billion, it became Europe’s fastest-ever double unicorn, just fourteen months after its Series A round.
Expanding into the US market
Zilch is confident it can replicate its UK success in the US. In 2020, US citizens paid over $12 billion in fees and charges on credit cards, suggesting that there will be a hunger for Zilch’s fee-free offer, especially during a cost-of-living crisis.
Zilch is launching with 150,000 pre-registered customers, but Belamant believes the potential market is much bigger. “We’re seeing between four and five times the uptake we saw in the UK. We think our target audience in the US could be around 120 million people.”
A key to this growth is the partnerships that Zilch has forged. Their alliance with Mastercard, for example, means Zilch can be used in nearly 40 million retailers around the world, giving Zilch’s customers unparalleled choice in the BNPL market. But they have also forged alliances with other fintechs like Cross River, Margeta, and Checkout.com to support their operations. Checkout.com’s founder and CEO, Guillaume Pousaz, for example, pointed to how the partnership supported Zilch’s “bold and innovative approach to helping consumers afford the goods and services they need.”
Zilch has also opened its US office in Miami. Long one of the US’s leading financial centres, the city has seen increased investment since Covid. “Miami is a forward-thinking city. A lot of fantastic people and companies are now there,” says Belamant. But he also stresses the benefit for the staff there, currently about 20, but with plans to hire around 100 more. “People want work-life balance. For us to provide our core team with an environment where they can enjoy the outdoors, the lifestyle, the office, and be in one of the most forward-thinking cities and states in the US, it’s exciting.”
Selling BNPL 2.0
For Belamant, the biggest challenge is selling its product. Although BNPL is familiar, Zilch’s unique approach sets them apart. “We’re not just another button on the payment page. Are people happy with how our product works? Do they know our brand?”
The focus on the customer has led to Zilch offering more than just payment by instalments. Customers can, for example, earn cashback towards future purchases. But, for many, savings might be the biggest attraction. “For our customers in the UK last year, we created savings of between $60 and $100 million in fees and interest,” Belamant says. “In the US, that could be anywhere between $600 million and a billion.”
For Belamant, that is the most exciting part. “With the cost of living going up, it’s a critical time for us to provide Zilch. It means people don’t have to rely on high-cost credit. I don’t think there’s been a time recently when it would mean so much to so many, and we’re excited to be able to provide it.”