- Splitit is a fintech company founded by Israeli entrepreneurs Gil Don and Alon Feit in 2009. The platform was initially created to allow consumers to use existing credit to make BNPL purchases.
- Splitit relies on transaction fees to make money, with the exact fee depending on how and when the merchant chooses to be paid.
- Splitit does not charge consumers for late or missed payments. Nor does it charge interest on purchases. Instead, the company relies on transaction value and mass consumer uptake to make money.
Aspect Description Overview Splitit operates on a buy now, pay later (BNPL) business model that enables consumers to make purchases and divide payments into smaller, interest-free installments. Unlike traditional BNPL solutions, Splitit focuses on leveraging existing credit cards and doesn’t require consumers to apply for new credit lines or undergo credit checks. This approach aims to provide consumers with financial flexibility and convenience while driving sales for merchants. Core Value Proposition – Interest-Free Installments: Splitit allows consumers to split their purchases into smaller, interest-free installments, reducing the financial burden of large transactions. – No New Credit: Consumers can use their existing credit cards, eliminating the need for new credit applications or credit checks. – Merchant Sales Boost: By offering Splitit as a payment option, merchants can potentially increase their sales and average transaction values. How It Works 1. Checkout: Consumers select Splitit as the payment option during the online checkout process. 2. Credit Card Authorization: Splitit verifies the consumer’s available credit on their existing credit card but does not charge the full amount upfront. 3. Installment Plan: The total purchase amount is divided into equal monthly installments. Consumers pay each installment on their regular credit card billing cycle. 4. Completion: Once all installments are paid, the purchase is complete. Merchant Integration Splitit integrates with e-commerce platforms and payment gateways, making it accessible to online merchants. Integration is straightforward, and Splitit offers plugins and APIs to facilitate seamless implementation. Global Presence Splitit serves a global market, allowing consumers and merchants worldwide to benefit from its BNPL solution. Its reach extends to numerous countries, making it available for cross-border transactions and international e-commerce. Revenue Model Splitit generates revenue primarily through merchant fees. Merchants pay a fee for each transaction processed through Splitit. This fee covers the cost of Splitit’s service, including installment plan management, credit card authorization, and customer support. Consumer Benefits – Financial Flexibility: Splitit offers consumers a flexible payment solution, making high-value purchases more manageable. – No Interest Charges: Since Splitit doesn’t charge interest, consumers avoid the costs associated with traditional credit financing. – Credit Card Rewards: Consumers can still earn rewards and benefits from their existing credit cards when using Splitit. Merchant Benefits – Sales Increase: Merchants can potentially boost sales and conversion rates by offering Splitit as a payment option, especially for higher-priced items. – Reduced Cart Abandonment: Splitit may help reduce cart abandonment rates, as consumers are more likely to proceed with a purchase when installment payments are available. – Larger Basket Sizes: By making larger purchases more accessible, Splitit can increase the average transaction value for merchants. Challenges and Risks Splitit faces challenges related to competition in the BNPL industry, especially from established players. Regulatory scrutiny and changes in the financial industry’s landscape can also pose risks. Ensuring secure payment processing and addressing consumer concerns about credit card authorizations are ongoing challenges. Future Growth Strategies To sustain its growth, Splitit is likely to focus on: – Expanding Merchant Partnerships: Forming partnerships with more online retailers to increase its acceptance and availability. – Innovation: Developing new features and services that enhance the BNPL experience. – Geographic Expansion: Entering new markets and regions to broaden its global footprint. – Adoption of Mobile Payments: Integrating with mobile wallets and platforms to cater to changing consumer preferences.
Table of Contents
Origin Story
Splitit is a fintech company founded by Israeli entrepreneurs Gil Don and Alon Feit in 2009.
Don and Feit used their extensive experience in finance and information technology to create a somewhat unique platform in the buy-now-pay-later (BNPL) space. The pair envisioned Splitit to be a service enabling consumers to use their existing credit to break a purchase into smaller, interest-free purchases.
To that end, they filed a patent for “a system and method for facilitating credit transactions, which may allow for the division of a given purchase or cash-withdrawal transaction amount, into periodical installments by enabling the financing of said transaction.”
After five years of hard graft, Splitit was launched as PayItSimple in the United States in 2015. The launch coincided with the company moving its headquarters from Tel Aviv to New York City. At the time, very few companies in North America were offering similar services.
In May 2015, the company secured a $10 million round of funding. PayItSimple then expanded into the British market and rebranded as Splitit two months later. In 2018, the platform added debit card payments and became integrated with platforms such as Magento and Salesforce. Emulating the path of many other BNPL players, the company held a $12 million IPO on the Australian Stock Exchange in January 2019.
Since 2019, Splitit has expanded rapidly as larger competitors such as PayPal look to establish themselves in the BNPL market. The company secured millions in successive rounds of funding and established additional presences in Japan and the Middle East, among other initiatives.
In March 2021, the company announced that annualized merchant sales volume grew to $345 million – a 180% year-over-year increase.
Splitit revenue generation
Splitit’s primary source of revenue is transaction fees, which are paid by the merchant when a customer selects Splitit as a payment option either online or in-store.
Transactions fees vary according to how quickly the merchant wants to receive their money and the country they operate in.
Generally speaking, there are two transaction fee structures:
- Standard – where the merchant is paid as the consumer pays their monthly installments. The transaction fee is 1.5% plus $1.50 per installment.
- Funded – where the merchant receives the full amount of the purchase up front. Here, the transaction fee is 3% plus $1.00 per installment.
In addition to offering credit as a BNPL option, Splitit differentiates itself from other providers by not charging fees to consumers for late or missed payments. What’s more, Splitit does not charge interest on purchases.
To maximize revenue, the company instead focuses on increasing the total transaction value and the number of shoppers utilizing its platform.
Key Highlights
- Founding and Origin: Splitit is a fintech company founded by Israeli entrepreneurs Gil Don and Alon Feit in 2009. The platform was created to allow consumers to use existing credit for buy-now-pay-later (BNPL) purchases.
- Unique Concept: Splitit’s platform enables consumers to break a purchase into interest-free, smaller installments, using their existing credit, rather than providing new credit or loans.
- Global Expansion: After its launch as PayItSimple in the United States in 2015, the company rebranded as Splitit and expanded into the British market. It later established a presence in Japan and the Middle East, among other initiatives.
- Funding Rounds: Splitit secured multiple rounds of funding, including a $10 million round in May 2015 and a $12 million IPO on the Australian Stock Exchange in January 2019.
- Rapid Growth: Splitit experienced significant growth in its merchant sales volume, with a 180% year-over-year increase in March 2021, reaching an annualized merchant sales volume of $345 million.
- Revenue Model: Splitit primarily generates revenue through transaction fees paid by merchants. There are two fee structures: Standard, with a fee of 1.5% plus $1.50 per installment, and Funded, with a fee of 3% plus $1.00 per installment.
- Consumer-Friendly Approach: Unlike some competitors, Splitit does not charge consumers for late or missed payments, nor does it charge interest on purchases. Instead, the company focuses on increasing transaction value and consumer uptake to drive revenue.
- Integration and Partnerships: The platform integrated with popular e-commerce platforms like Magento and Salesforce, making it more accessible to merchants and consumers alike.
- Competition: As larger competitors, such as PayPal, entered the BNPL market, Splitit faced increasing competition but continued to expand and establish its presence globally.
- Innovation: Splitit’s approach to BNPL stands out by leveraging existing credit lines and offering interest-free installment options, attracting consumers looking for flexible payment solutions.
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