Apple, Disney and other big brands are pulling X ads – why Elon Musk's latest 'firestorm' could bring down the company
Naver's CHZZK Targets Gaming Streaming Dominance, Twitch Exit Boosts Competition with YouTube, AfreecaTV
Philip Belamant’s Payments Industry Disruptor Zilch: Not Your Grandmother’s Installment Plan
Shortly after starting a new position with a public relations firm, Cassie was invited to her first big corporate fundraiser at a local art museum. Everyone was going to be there, including her boss. This was Cassie’s chance to make an impression, but she had nothing to wear. While browsing a fashion website, she discovered the perfect dress for the occasion but was taken aback by the price. Rather than giving up, she remembered she had the virtual Zilch Mastercard in her digital wallet. Using the card, she made a down payment – and received the dress in plenty of time for the fundraiser – while agreeing to pay the remainder in three equal installments over the next six weeks, interest-free.
This is just one advantage of using buy now, pay later (BNPL). While the concept isn’t new – Cassie remembers her grandmother placing items on layaway during the holiday season – it’s been tweaked to meet the demands of today’s shoppers. Unlike layaway, where shoppers make a down payment and the retailer holds the item until it is completely paid for, BNPL allows individuals to take immediate possession of an item before they finish paying for it. This option is especially popular among young shoppers who are trying to steer clear of traditional credit and debit while still seeking to purchase big-ticket items with lower wages. They feel better using BNPL because they know they don’t have to pay for an item all at once – it doesn’t feel like debt to them.
Zilch Enjoys Unprecedented Success in Payments Arena
Under the guidance of CEO and co-founder Philip Belamant, London-based Zilch has been able to tap into the $45 trillion global bill payments and eCommerce industry and emerge as a leader in credit lending, including BNPL services, which now command an ever-growing slice of market share. Easy-to-use BNPL apps are targeted at online purchases and enable the consumer to pay off the balance due in regular short-term installments. Some BNPL and payments providers offer consumers a limited-time, interest-free period.
Most BNPL providers (e.g., Klarna, Afterpay, and PayPal Credit) offer their services through online retailers. When the customer selects the BNPL option during checkout, the retailer sends payment to the BNPL provider. Following the transaction, the customer can expect to receive further communication (including marketing messages) from the BNPL firm.
Zilch’s Strong Customer-Centric Focus
Although Zilch has adopted several elements of this standard business model, it has also forged its own path. For example, Zilch has chosen to work with the customer rather than the merchant, which allows consumers broader access to goods and services. Launched in late 2020, this innovative fintech company currently integrates its BNPL services with thousands of eCommerce merchants across the United Kingdom.
Each Zilch customer uses “tap-to-pay” technology to complete purchases via the Zilch virtual Mastercard. If customers make a one-payment purchase, they earn up to 2 percent cash back instantly in Zilch rewards that can be used toward future transactions. Alternatively, customers can pay in four equal installments over the course of six weeks without being charged any interest on the transaction.
Zilch Sets Itself Apart by Adopting a New Paradigm
From this point on, Zilch’s paradigm diverges completely from that of its competitors. First, Belamant chose to employ a value-added approach when he founded the company. Customers receive a reward every time they use their Zilch card to make an online purchase and choose to pay in one installment.
Equally important, customers can use Zilch at any shopping destination that accepts Mastercard payments – that’s more than 37 million merchants! This direct-to-consumer (DTC) approach means Zilch does not depend on integration with a specific retail network. The company is free to brand itself as a vertically integrated customer-first product, which increases online retailers’ appeal.
Consumers can now shop at most of their favorite retailers, including Nike, Michaels, Walmart, Best Buy, The Home Depot, and Sephora. For foodies, Zilch can be used to order food from GrubHub or Doordash. By leveraging the Mastercard platform, Zilch has opened the door for millions of consumers – soon to be around the world.
In this respect, Belamant sees similarities between Zilch and the online retail powerhouse Amazon. This global retail behemoth has also enjoyed unprecedented growth by adopting an unconventional DTC business model.
Customer Satisfaction Drives Zilch’s “Flywheel of Value”
The cashback feature is part of Zilch’s core “Flywheel of Value” approach, which relies on customer satisfaction to drive sales. To use the company’s tap-to-pay functionality, customers simply access the virtual Zilch Mastercard in their digital wallet.
When customers complete their purchases with a single payment, they earn a cashback reward on the transaction – instantly. Over time, these rewards accumulate and can be used to pay for future online or in-store purchases. Retailers also benefit from this strategy because, as studies have shown, consumers who pay in installments tend to spend more.
Toward Better Cash Flow Management
Behind the scenes, Zilch’s open banking technology executes a customer-specific affordability assessment for each transaction. Every time a customer uses the virtual Zilch card to make a purchase, the software updates the assessment. This enables customers to better manage their cash flow over time.
Belamant explains that Zilch’s Flywheel of Value has played an important role in helping cash-crunched consumers manage their finances: “With the recent surge in the cost of living, people need a product that works in their interest.”
Rather than trying to base spending on a willingness to overspend (like credit card companies), Zilch focuses on freeing consumers to shuffle their funds and manage their finances however they see fit. This puts the power back in the hands of consumers.
“In December 2021 alone, we provided [more than] $5 million of value in cashback and rewards to our customers and saved in the vicinity of … $50 [million] in interest and fees for customers in 2020, at a time when it most [counted]. It’s a testament to our growing international team and the unique customer-centric approach that we’ve pioneered,” Belamant shares.
Belamant Eases Consumer Concerns About User Fees
Although 31 percent of consumers have already used a BNPL service, many people still have misconceptions about how BNPLs generate income. In late March 2022, Zilch conducted a survey among U.S consumers that produced some surprising results.
According to Zilch, 43 percent of American consumers think BNPL companies make money on the interest paid by customers (like credit card companies). Belamant wants to set the record straight.
“It’s a crucial point of differentiation that many BNPL providers, including Zilch, do not charge interest, while credit card [companies] stand to jeopardize the financial well-being of consumers with high-interest rates and balloon payments,” he notes.
“According to the Consumer Financial Protection Bureau, Americans paid $120 billion annually in credit card interest and fees between 2018 and 2020, equating to $1,000 each year per household.
“The fact that nearly half of consumers believe that all BNPL providers charge interest when they absolutely do not is not only concerning but can be significantly detrimental to consumer health,” Belamant concludes.
Double Unicorn Zilch Poised to Move to the Next Level
It’s no exaggeration to say that Zilch has taken the BNPL market by storm. In November 2021, the firm received a $2 billion valuation – just 14 months after completing its Series C fundraising round. In the venture capital industry, this makes Zilch a “double unicorn,” and, at the time, the most rapidly growing European unicorn in history. (A “unicorn” is a startup business that is valued at $1 billion or more.)
Zilch Dramatically Increases Its Customer Base
Zilch’s customer base also continues to grow at an impressive rate. The company reached the 1 million user milestone in just 13 months. For perspective, this is faster than many of the most rapidly growing fintech firms in the world. By mid-March 2022, Zilch reported that it had surpassed the 2 million user mark.
Besides gaining new users at a rapid rate, Zilch says its customers are using the app more frequently in their daily lives. After tracking its core customers’ buying patterns, Zilch reports that this cohort is using the Zilch card daily.
Tap-to-Pay Feature Enjoys Wide Popularity
Zilch reports that its tap-to-pay feature plays a key role in the app’s popularity. The tap-to-pay methodology has enjoyed widespread acceptance, with 40 percent of daily sales processed via this method.
Stated another way, customers are using their Zilch card as often as they would use a conventional credit card or debit card. As a result, shoppers are collectively saving $50 million in potential credit card interest and card fees.
Zilch Establishes an International Presence
In early May 2022, Zilch was finalizing its plans for entry into the U.S. payments and BNPL marketplace. To cement its participation in the global technology-based financial services community, Zilch joined the Financial Technology Association (FTA).
Belamant expresses his support for the FTA’s advocacy work on behalf of American businesses, consumers, and the larger economy: “Zilch was one of the first BNPL providers in the United Kingdom to be FCA [Financial Conduct Authority] regulated as financial health is built into the core of our business model.
“With this in mind, we are excited to be working with the Financial Technology Association as a voice for us and the industry at large in Washington [D.C.]. This is such a crucial time. With economic volatility creating a cost of living crisis, consumers need access to innovative options to pay and awareness of better alternatives for more responsible spending and lending.
“We’re excited to partner with like-minded fintech companies to advocate for modernized financial policies that enable responsible, consumer-friendly innovation,” Belamant concludes.
Belamant’s Brand of Industry Disruption
Zilch continues to shake up the United Kingdom’s BNPL and payments marketplace and will bring its services to the United States. It is here, in national fintech arenas, where Belamant continues to apply his well-known penchant for market disruption. Prior to co-founding Zilch, he successfully launched several fintech businesses in the South African market.
Belamant claims the best form of disruption does not involve tearing down and rebuilding an existing system. Instead, he says, building on the current infrastructure is more effective. When a company uses this approach, customers enjoy an enhanced experience without having to change their behavior.
Building on the Existing Ecosystem
Belamant explains his innovative approach to disruption: “The one thing that in the past we’ve been successful doing, and [we] are taking the same approach now, is really this concept of what is the best form of disruption. And my view has always been [that] the best form of disruption is when you can completely transform the way a customer does something without any change.
“A lot of people think about this [disruption] where you … rip something apart and do it differently or circumvent what’s already existing. What we’ve managed to do in the past (and with Zilch) … is … leave the ecosystems that exist intact,” he says.
“A lot of people have done a lot of great work and spent billions of dollars to build payment infrastructure or affiliate commission or marketing infrastructure. There’s a huge ecosystem around that [including] sales houses, ad agencies, etc.
“If you can leave all of that intact, but at the same time fundamentally disrupt how the customer transacts over and above these platforms, I feel like that’s the best form of disruption,” he concludes.
Belamant feels that constantly evolving technology is the key to implementing this “piggyback” infrastructure approach.
Helping to Shape the Regulatory Environment
Many businesses prefer to avoid regulatory involvement at all costs. Belamant, however, chooses to collaborate with regulators whenever possible. During the development phase of each business (including Zilch), he consults with regulators to find an approach that best serves his customers. Thus, his companies can be seen as a constructive market force.
In addition, he helps to shape the regulatory environment for the larger industry. He is often praised for this “win-win” strategy in addressing a frequently troublesome issue.
Snapshot of the Zilch FCA “Regulatory Sandbox” Program
Belamant describes how he worked hand-in-hand with regulators during Zilch’s development phase. “... the BNPL or installments lending space in the United Kingdom, [which is similar to that of] the United States, is exempt from regulation ...
“What happened … is [that] we went to the regulator [during] the sandbox process. … The regulator [had] a specific environment [where we could] bring innovation or innovative solutions to them.
“And basically, we said to them, ‘Hey guys, we don’t know where this fits. We wouldn’t even know what to apply for because this is not on a credit card. It’s not installment lending, and it’s not exempt. So, help us figure it out.’
“Then [the regulator] used this process to understand what [we were] doing and … [whether it needed] to innovate or update the regulation. That’s the process we went through. And we worked hand-in-hand with the regulator through this process to get to the point where we [applied for] a consumer credit license. The [regulator] also [learned] a lot … from this.
“This is a good example of how we took a step forward before everyone else to … engage a regulator in a forum that would allow the regulator [itself] to innovate. And I think that’s important,” Belamant summarizes.
Zilch Is Primed for Large-scale Expansion
As Zilch enters the massive U.S. BNPL marketplace, Belamant is confident that the company is on the right track. He believes Zilch’s customer-centric approach, and its emphasis on providing concrete value, enables the business to make customer connections on an unprecedented level.
“Never before in the history of payments have we seen so much value created for customers each and every time they transact. This is why we see Zilch resonating deeply with customers,” says Belamant.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes
Will AI kill our creativity? It could – if we don’t start to value and protect the traits that make us human