In February, tech guru Dave Savage hosted Zilch’s CEO and founder Philippe Belamant at Technical conferences podcast, where they discussed the latest Buy Now-Pay Later (BNPL) moves that Zilch led. After successfully shaking up the buy-now-pay-ulter sector by offering a new, safer BNPL solution in 2018, fintech quickly developed its offers. And Zilch has been particularly prominent in recent media as a new Financial Conduct Authority (FCA) The regulations mean that Zilch is one of the only FCA regulated BNPL providers in the UK.
These new FCA policies follow serious debt cases buyers have fallen into while shopping from BNPL suppliers who have not offered sufficient protection. Zilch supports the new FCA regulations and wants to lead by example on how a customer-centric BNPL provider should model their offerings.
We deepened the Tech Talks interview and provided an overview of Zilch’s vision for responsible drinking. There is a lot to learn here, especially if you are interested in wise budgeting and efficient allocation of your costs.
Belamant kicked off the interview by introducing Zilch to Tech Talks listeners. He explained that although there are many players in the BNPL market, Zilch stands out because it is a direct supplier to consumers. This means that while Zilch’s competitors do business with retailers who in turn offer payment plans for buyers, Zilch prioritizes the needs of buyers and connects directly with them, monitoring their affordability to avoid fees. delay and other payments. This model has led some customers to compare Zilch to American Express – Zilch has combined all the convenience of the Amex card with the ease of use offered by BNPL models.
When a buyer uses Zilch to make a purchase, they only need to pay 25% up front. They can then pay an additional 25% every two weeks, spreading the cost of their purchase over six weeks.
Why Many Buyers Rate BNPL Models Over Credit Cards
Historically, many people have used credit cards and loans to spread costs, but healthy BNPL models eliminate the credit risk factor and make purchases safer.
âBNPL is built on a fixed sum loan model,â Belamant said. âIt’s not a running balance. It is not a common credit model. If you look at credit cards, the whole business model is all about lending you enough money that you can’t afford to pay off on time because they only care about the fees on the part of the money. money that you do not refund after the free period. ‘
âFor example, if you have a card from one of the major UK providers, they give you 45 days interest free. Their goal is to lend you enough money during this period that you do not resolve the total balance after 40 days as this is where they start charging you 22.7% APR, not just on the ‘money from that day, but, in some cases, in retrospect. It is their economic model. It’s almost built on the over-loan. In fact, it’s the complete opposite of BNPL. ‘
âAt BNPL, companies receive a fixed commission per transaction from the retailer. So it’s in their best interest that you pay them back on time every time. Because the longer the money is out, the smaller the margin on this transaction is for the supplier, because they don’t charge the customer anything. So the whole model is based on paying back on time. This is why this inherent protection is built into BNPL products. ‘
âWhat I mean by that is if you are late for a remittance, BNPL providers usually prevent you from making further purchases. They will send you SMS alerts or you will receive notifications in the app: you owe us money – we’ll bill you tomorrow. Why don’t you get them from your credit card provider? Because they want you to be late. At BNPL, the whole model is based on whether you are early or on time. I think this is something the market needs to understand. It is the most responsible way for a customer to share the cost of something. I really believe it. And the most affordable way.
How Zilch Attracts Customers
As a relatively new player in the market, Zilch had to innovate effectively to attract customers. And it is undeniable that the purchasing incentives of the supplier BNPL have achieved this objective. Belamant pointed out that most of Zilch’s customers find them on social media, where they can click to complete an easy signup process, agree to the terms and conditions, and fully understand how the model works. Some BNPL vendors don’t offer this clarity and ease of use, but Zilch buyers are well aware of how the cash flow management tool works.
As a result, Zilch launched a Â£ 10million fund last year to scale up its popular BNPL solution to meet rapidly growing demand. On that note, Zilch has now reached over 500,000 users – an important step for the company.
How does shopping with Zilch work
Belamant also explained how Zilch made his model particularly accessible. Zilch is the only BNPL provider to partner with MasterCard, which means buyers can share their bills with any retailer that accepts MasterCard payments – which is most of them. Buyers receive a virtual Zilch MasterCard when they sign up, and they can save it in their browser, Apple Pay, Samsung Pay, and / or Google Pay to make payment easier than ever.
Now that the government has started to roll back COVID-19 measures, Zilch is eager to launch its brand new tap-to-pay overtime product, which will also allow shoppers to use their Zilch MasterCards in-store as well.
The only BNPL provider regulated by the FCA
As previously mentioned, Zilch’s efforts to help buyers avoid debt problems grabbed the headlines when the FCA overhauled its regulations earlier this year, making Zilch one of the only BNPL providers to go out of business. comply with the new rules. During the interview, Belamant explained that Zilch worked closely with the FCA for over a year, completing their Regulatory sandbox process, to become certified. The FCA welcomed Zilch’s rejection of compound interest and low initial loan limits.
âWe’ve spent 12 months in this process with FCA, figuring out how we can build this model so that we don’t just consider solvency, but affordability,â Belamant said. âThat’s what all of today’s conversation is centered on. We’re looking at how we can help businesses change the way they assess customer affordability. We might even publish a white paper explaining how we do this with the combination of our open banking technology and self-credit check. ‘
“Zilch is one of the first BNPL providers in the UK to be FCA regulated,” he added. âMost of the other providers operate under an exemption. And we could have chosen to follow the same path with our company. But we said, if we’re trying to bring the most value to the customer, how do we make sure they have a good understanding of what the product is? It is a debt instrument; this will create a liability that you will have to repay. The customer must understand this. And as long as the customer understands this, I think this will be one of the most accepted payment methods – and should be one of the most popular – over time, mainly because it is, without a doubt, the most affordable way for a customer to do this. ‘
Help buyers avoid financial hardship
Belamant explained that Zilch is the perfect platform for savvy shoppers – the kind who want to avoid paying too much for travel, accommodation, meals, and even their daily purchases. While some credit cards charge abusive rates and fees, Zilch offers transparency that appeals to buyers who just want to spread the costs, especially Millennials and Gen Z customers.
âWhen we talk about this with people in the industry, I often sit down in a meeting and say to people around the table, ‘Suppose I have Â£ 1,000 unpaid at the end of a 45 day period. on my branded payment card. Can you please tell me after 10 days what the charges are? âEven the people issuing the cards can’t tell me the answer,â Belamant said.
âAnd our customers are definitely not ready to do it. They don’t want this lack of transparency in their transactions. And this is why the BNPL industry has done a phenomenal job of offering very low costs or completely free credit to people who would otherwise have been left out, mainly because of the old-fashioned way of assessing creditworthiness. through the old credit checks and bureaus, which today serve a big purpose. Unfortunately, they don’t tell us much about the affordability of a young customer who doesn’t have a credit history.
More ideas from Philip Belamant
This is just a glimpse of Zilch’s success to date and its plans to modernize responsible consumption in the BNPL market. To learn more about how Belamant and innovative fintech are making their mark in the BNPL industry, listen to the full Tech Talks interview.
As the first BNPL provider to integrate open banking data into customer affordability assessments, Zilch is redefining what it means to deliver a true solution in the buy-out industry. Leader BNPL is dedicated to protecting buyers and, unlike many competitors, refuses to catch buyers with hidden fees and late payments. Instead, Zilch runs automatic reviews every time a buyer makes a purchase. This safer way of shopping attracts more than 70,000 customers to Zilch every month.
AT create a Zilch account, you just need your debit card, phone number, email address, and mailing address.
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