British buy now pay later (BNPL) company Zilch has launched in the US with the opening of a Miami headquarters, as it looks to take on rivals Klarna and Afterpay in a highly competitive market.
It has launched with over 150,000 pre-registered customers in a market that it sees as six to seven times larger than its target audience in the UK.
The London-headquartered company plans to hire over 100 employees in the US over the next year.
Zilch’s BNPL services, which lets customers pay for products in interest-free instalments, will now be available to Americans wherever Mastercard is accepted.
“In 2020, US consumers paid $120bn in fees and late charges to credit cards, which we believe is unacceptable and fundamentally misaligned with the interests of consumers,” said Philip Belamant, CEO and co-founder of Zilch. “They are being set up to fail and need more flexibility, especially during a cost of living crisis and a time of surging inflation, to pay for goods and services how and when they want – with a system that avoids late payments and unnecessary, onerous fees.”
In the US, Zilch will be competing with the likes of Swedish rival Klarna, Australia’s Afterpay and San Francisco-headquartered Affirm.
Zilch is billing itself as “BNPL 2.0”, charging no interest or late fees and offering cashback rewards.
The company uses open banking technology to make spending recommendations to customers and has partnered with credit agency Experian for reciprocal reporting of payment plans to its data set.
Zilch’s US launch follows a rapid period of growth for the fintech, growing to over two million customers since it launched 18 months ago.
Zilch has raised more than $400m in funding and is valued at more than $2bn.
Strategic acquisition for US launch
Zilch’s US business will be spearheaded by Albert Periu, who joined the company via its acquisition of Miami-based financial services company NepFin in August last year.
That acquisition paved the way for Zilch’s US expansion.
“It wasn’t a case of buying a customer base or anything like that,” Belamant told UKTN in a recent interview. “It was to get a strong foothold in the country [with] people who know the market, have built businesses in the market. We’ve seen companies from Europe come across [to the US] and make mistakes before, and therefore it can help us avoid these.”
Historically, European fintech companies have struggled to break into the US market. However, Belamant believes Zilch can scale “very quickly” because the “core unique selling point doesn’t need to change dramatically”.
Instead, Zilch has been focusing more on presenting BNPL to an American audience, from the language used to describe its products to the imagery used in marketing.
From a regulatory perspective, Zilch said it will operate at a federal level to make it easier for a nationwide rollout.
The rising popularity of BNPL services has attracted the attention of regulators in the UK and elsewhere.
Belamant said that US regulators are starting to investigate BNPL “very similarly” to the UK’s Financial Conduct Authority’s (FCA) first moves last year.