Zilch
Behind the Idea Europe Fintech Fintech for Good Paytech

Behind the Idea: Zilch

As one of the UKʼs first pay-over-time providers to be granted a consumer credit licence by the UK financial watchdog and Europeʼs fastest fintech ever to go from Series A to a double unicorn, Zilch has enjoyed rapid success since its launch in 2020.

The payments tech firm is led by CEO Philip Belamant, a serial entrepreneur with early success occurring in the emerging African markets and a contender for the 2022 EY Entrepreneur of the Year National Awards 

In this week’s Behind the Idea, Belamant reveals the secrets to Zilch’s success and how the company is navigating the path between continued growth and a pivot to profitability.

Philip Belamant, founder and CEO, Zilch
Tell us more about your company and its offering

Our mission is to build the world’s most empowering way for people to pay for anything, anywhere. We are pioneering a never-before-seen type of ubiquitous payment technology which offers customers the very best of debit and credit.

Through our vertically integrated, direct-to-consumer business model, we provide our customers with a virtual payments card which they can use to pay via debit, receiving two per cent instant cashback, or via credit, spreading the cost over six weeks for zero per cent interest.

It combines the cashflow management and rewards of a credit card, minus expensive fees, with the built-in protections of our fully regulated model, and it can be used at any of the 38 million merchants worldwide where Mastercard is accepted.

Zilch’s crucial innovations are the direct relationships we’ve built with our 2.5 million customers (and growing); the ubiquity and different payment options we provide to those customers; and the appeal to retailers of spending their marketing budget to reach the millions of customers on our platform.

Being paid out of retailers’ marketing budgets means that we can sustainably process huge volumes in payments, at attractive margins, without charging customers any interest or fees. That is a major differentiator – we are using merchants’ advertising dollars to subsidise the cost of free credit and cashback for our customers, doing for payments what Google has done for search.

What problem was your company set up to solve?

Zilch was founded to empower consumers to make healthier and more rewarding financial choices. We wanted to equip customers with a tool to stop them sleep walking to credit cards and paying extortionately high interest to simply manage their cash flow or have access to credit.

We also wanted to democratise access to credit-card-style rewards and cashback on daily spending, which aren’t available to many consumers. In a little over two years since we launched our product in the UK, we have already provided over $72million in savings and cashback rewards to our customers.

The traditional credit card model had gone unchallenged for way too long and in 70+ years since invention, it’s almost completely unchanged. In today’s economic environment, amid a cost-of-living crisis, its unspoken shortcomings are only going to become even more apparent.

We saw a gap in the market to reimagine payments and commerce. Building a platform that uniquely combines payments – the best of both debit and credit – and commerce on a single vertically integrated, direct-to-consumer platform which benefits our customers as well as the merchant.

Since launch, how has your company evolved?

After launching our product out of beta in September 2020, we reached the one million customer milestone one year later, and within another six months had doubled that to two million.

Alongside the  growth in customer numbers, we’ve recorded a series of successful fundraises to support our development and expansion. That led to achieving a $2billion valuation through our Series C fundraise in November 2021, just 14 months after our Series A funding round. That made us not only a ‘double unicorn’, but also the fastest European tech company to reach that milestone ever. Something we’re really proud of.

Most recently, while the world of valuations, especially technology oriented businesses were down-rounding massively, we secured an additional $50million in funding this June, bringing Zilch’s total funding to more than $460million in debt and equity.

Among our most mature customer cohorts, we have achieved utilisation rates which were previously unseen among many of our peers in the fintech space. We see returning customer cohorts using Zilch daily – that’s more often than people use household names such as Amazon, Deliveroo and Uber.

What has been the biggest challenge or most ‘tricky moment’ to overcome?

We founded the company in 2018 and fully launched our product out of beta at the end of 2020. Each of those moments had their associated challenges. Much of our quickest growth took place during the pandemic, which naturally presented some operational complexity.

When we launched the business, we worked with the FCA as part of the Sandbox Programme. It was a really intensive process to become one of the UK’s first buy now, pay later providers to be granted an FCA licence to perform regulated Consumer Credit activities.

But we believed that, to offer the best possible payments product to consumers, then we had to do the work required to provide them with the full protections that come with being FCA-regulated. There was an added vindication, three years later, when the UK Government announced this summer that any BNPL provider will need to be regulated by the FCA, a framework with which we are already fully compliant.

What are your biggest achievements or ‘proudest moment’ so far?

One of our biggest achievements was when we became the fastest-ever fintech to go from Series A to a double-unicorn status, achieving the milestone in just 14 months. But, in a way, the $50million top-up to our Series C round that we announced in June was even more meaningful.

We maintained our $2billion valuation, bucking the trend of severe downward pressures seen globally on fintech valuations. That was testament to how our investors shared our belief and confidence in the value of the platform we have created for consumers and the resilience of our business model, even in incredibly challenging economic conditions.

How would you describe the culture of your company?

Our team is made up of entrepreneurial-minded individuals who embody the drive and passion that’s often synonymous with startups. But something that we really focus on is a commitment to doing the right thing, and to acting ethically, with integrity and in the customer’s interest. When we meet potential new hires, we want to hear how they answer the question: ‘How important is it to do the right thing, even when nobody’s looking?’

What’s in store for the future?

Because of the nature of our business model, the fact that we own the relationship with our customers and that our utilisation rates are running at really high levels, there’s a huge opportunity for us to add new payment products and move into adjacent areas like savings and investments. We’re looking at that carefully to identify what’s going to add the most value for our customers.

Otherwise it remains a case of continuing to grow at pace, in both the UK and the US, while still steadily increasing the proportion of our users and transactions which are net-transaction-margin profitable. Both we and our investors want to chart that careful course between continued growth and a pivot to profitability, particularly in the current market environment.

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