The way to pay that everyone is
Born to create the world’s most empowering way to pay.
How does Zilch work?
Customers sign up to Zilch and once approved, receive a virtual payment card with a personalised credit balance. They can use this balance to make purchases at retailers that accept MasterCard and spread the cost across 6 weeks. The customer pays 25% of the cost of the purchase immediately and then the remaining balance is divided into 3 equal parts - each part payable every 2 weeks. This is known as “Pay in Four”. This is a very different repayment mechanism to a traditional interest-bearing credit card where customers can opt to pay only a minimum payment and balances can take up to years to pay off.
A customer can also use their virtual Zilch card to pay for the entire purchase in one go and earn 2% cashback in Zilch Rewards which can be used to discount future purchases - this is called “Pay in One”. The virtual Zilch card is accepted at retailers where Mastercard is accepted – currently more than 37 million worldwide.
How much does it cost to use Zilch?
It costs nothing for a customer to apply for and receive a Zilch virtual Mastercard with a balance available to split (which is personalised for each customer).
We also don’t charge interest on transactions and we don’t charge annual or monthly fees.
In the US:
No fee is applied whether using “pay in 1” or “pay in 4”, online or in any store.
In the UK:
When a customer chooses to pay in 4 with their Zilch card via “tap and pay” in-store, and in most stores on the Zilch app, it is completely free for a customer.
In a small number of cases, when paying online using pay in 4, we charge customers a small upfront fee for using their balance. It is made clear to the customer if any transaction fees apply and the amount.
We also give some customers the option to “snooze” payments if they need a few extra days. This service is free initially, and then a small charge of £1.50 is applied if used for second or third instalments. Where any fees apply, we make it clear to the customer. Zilch does not charge default fees.
How does Zilch manage the amount they let people borrow?
Zilch generates a real-time, 360 degree, comprehensive view of each customer’s affordability profile based on best-in-market data from credit reference agencies, Open Banking and proprietary behavioural data analysis of the customer’s transaction history. Our machine learning then sets personalised borrowing limits accordingly. These start as low as £50. As we observe a customer making regular, on-time repayments, we may increase their balance – again, this is personalised to the individual borrower and based on their unique personal circumstances and affordability.
What happens if someone can’t repay the money they have borrowed?
If a customer falls behind on repayments, we will stop any further borrowing. The customer is made aware of this and they can see in their Zilch app that their available balance to split is £0. We will also contact the customer to see how we can help and offer the option of a personalised payment plan. The customer is also provided with helpful contacts for independent debt advice charities if they may need further support. Zilch does not currently make use of collection agencies or debt collectors.
Zilch also doesn’t allow repayments via credit card or balance transfer, which risks compounding the customer’s situation further.
Is Zilch an alternative to credit cards?
Similar to a credit card, Zilch allows customers to defer part of a purchase to a later date. The difference is that with Zilch, the payment is deferred for a limited time period (namely 6 weeks) with an upfront payment made at the time of purchase. When making any purchase with Zilch via pay in 1 (debit) or pay in 4 (credit), we don’t charge any interest for borrowing.
With a credit card, a customer may defer the entire payment for an unlimited time and unless this is an interest-free promotion on purchases, they will then incur interest costs until full repayment is made. This places customers in a revolving credit model.
Products offered by Zilch are also typically cheaper than other comparable finance options, such as bank overdrafts and credit cards.
Bank of England data shows that the effective interest rate on interest-charging overdrafts is currently around 20%, while the cost of credit card borrowing is currently around 18%. UK Finance figures show that almost £55bn worth of UK credit card balances are outstanding as of January 2022, with more than half of these bearing interest.
Meanwhile, in the US, according to the Federal Reserve, US households held an estimated $856 billion in credit card debt in the last quarter of 2021, a $52 billion increase on the previous quarter. In 2020, US consumers paid $120 billion in credit card interest and fees.
By contrast, we do not charge interest fees on transactions and do not charge annual or monthly fees. In most cases, it is also free for a customer to use their credit balance to pay in 4 through the Zilch app or if they “tap and pay” with their Zilch card at any retailer.
In addition to this, we do not allow repayments via credit card or balance transfer, which risks compounding problem debt further.
How is Zilch different from other Buy Now, Pay Later (BNPL) companies?
The idea for Zilch was born out of our observations of the challenges that customers faced in the market. As a customer-centric business, Zilch provides users with the value they want from credit cards (points, deals, discounts and security) with the benefits of debit cards (no interest, no hidden fees). Delivering customers a flywheel of value.
First-generation BNPL providers rely on retailers and payments at the checkout, meaning they are competing against each other for merchant partnerships. Other BNPL or “Pay in 4, 6 or longer” companies provide the borrowing option at the point of sale. This means that they are wholly linked to retailers and the retailer is their “customer”.
At Zilch, our customers are people, not the retailer. This means that we are able to build a longstanding relationship with the customer, understand their needs, what they can afford and set borrowing limits before a customer decides whether or not to make a purchase and what they can afford. This puts the power of choice in the hands of the customer. The Zilch virtual MasterCard can be used online and in-store where MasterCard is accepted.
Zilch was built with financial health at our core, which is why we worked so hard with the FCA to secure a consumer credit licence from inception. At the beginning of 2022, Zilch partnered with the leading global CRA, Experian. Today, we are continuing to transform the way affordability is assessed which is the key to us delivering financial inclusion to all.
How does Zilch make it’s money?
Zilch has several revenue streams. The first being through the interchange associated with purchases made with the Zilch MasterCard. The second is through a commission payment we receive directly from retailers. Retailers take a position within the Zilch app “storefront” and because of the size of the Zilch customer base visiting the Zilch app daily, this customer traffic source offers a boost in retailer sales. The retailer then pays us a fee for introducing the transaction.
Finally, where retailers do not pay a large enough affiliate commission to cover the cost of sales, we charge the customer a small, upfront fee. This is made clear to the customer before the transaction is made meaning there are no surprises.
Is Zilch Regulated?
Zilch Technology Limited is authorised and regulated by the Financial Conduct Authority to perform regulated Consumer Credit activities (FRN 843421