Splitit’s Brad Paterson: ‘The state of the industry reminds me of the early days of PayPal’
Strongly encourage serious folks to read this 18 mins recording (from Feb20 just after the Stripe ann.) as some key points are not included in the edited transcript below. What resonates with me ...
We're delivering enormous benefits to consumers ... reminds me of the early days of PayPal ...
Founding premise - existing card, existing credit
6 years building the technology
Significant opportunity to scale
Merchants love it ... +30% conversion, some spend more .. we're really focused on eCommerce
Merchants often say we're serving a segment of the market no one else is
We're not well known ... only been selling the past 18 months
Most exciting journey of my career
Team in Israel is phenomenal ... calibre of the team ..
8 BNPL options ... retailers need help ... with price being the one area holding them back ... consumers need help alleviating that ... consolidation inevitable ...
Biggest challenge? Keeping our focus ... as so many opportunities ... great ideas ...
2020 - continue to innovate, communicate, marketing ...
Great product, once people know who we are, we'll be around for a very long time ...
Also worth pondering on current market caps:- APT $15.6bn
- Z1P $2.3bn
- EML $1.3bn
- SPT $533m
- OPY $270m
Splitit is a global payment technology that enables no-fee installments on credit card purchases. Unlike other point of sale financing platforms, Splitit isn’t consumer financing. There is 0% interest, no application or late fees.
CEO Brad Paterson has recently joined the firm after a 20 year career that included Visa, placed him at PayPal in its early days, and saw him leading Intuit’s US QuickBooks Online business. Brad joins us on the podcast to talk about the genesis of the business and how his firm found product-market fit. In an increasingly competitive market for point of sale loans, we talk about how Splitit differentiates itself. Lastly, we talk about the firm’s growth trajectory.
20 year career in payments
I’ve spent over 20 years in the fintech space. I cut my teeth at Visa where I spent a number of years in Asia Pacific in the merchant and consumer business. I then moved over to PayPal where I was the third employee in Asia Pacific. We helped build that business over eight years. It was very exciting times. I then moved over to Intuit where I lead the Asia Pacific business before moving over to run the QuickBooks Online business in the U.S.
I was at Intuit over six years before moving over to Splitit. I found a product that was delivering tremendous value to consumers that really reminded me of the early days at PayPal.
How it works
Our premise is that you can make purchases on your credit card and have them split into monthly installments. You need to have the available balance on your credit card. And wherever credit cards are accepted, you can use Splitit. Anyone who has a credit card can use Splitit, choose the number of installments and the payment is done. There’s no account application and no issuance of new credit. It’s a simple, seamless checkout.
Merchants love it because it doesn’t add extra steps to the checkout. Instead of selling a $4,000 TV, they can market it as $400 over 10 months. We significantly improve conversion — up to 30 percent in some cases. We’re predominantly focused on ecommerce. We’re really a technology layer — we’re not issuing credit to consumers.
Bigger purchases
We have helped increase order size. Of course, it varies significantly — anywhere from 20 percent to 80 percent. Virgin Pure, which provides water filtration systems to homes in the UK, recently claimed an average order size increase of 80 percent on transactions via Splitit versus other options.
Target merchant
It took us a while to figure it out as we were looking for product-market fit. Our target merchant is generally a merchant selling goods at $300 and above. Our average order value is about $850 — much higher than other payment option.
We see merchants in homewares, luxury retail, health like dental and veterinary, outdoor sporting goods like electric bikes and kayaks, and furniture and mattresses.
We are increasingly present on brands people know and love, like a number of the leading mattress merchants, like Nectar. We’re talking to a lot of well-known brands and I expect over the next 12 months that we’ll be present on a number of them.
Getting the word out
To get the word out, we’re predominantly active online, digital and social. We’re increasingly looking at influencers and consumer advocates in the financial services space, who learn and understand our product. There’s no silver bullet — it’s just about building out a lot of content to educate the market on our space and evolving our messaging and our brand. We’re also looking at expanding our partnerships to help spread the word.
Stripe partnership
We’re very excited to announce a partnership with Stripe, one of the largest payment infrastructure companies in the world. Given that we’re a technology layer connecting into payment gateways, it can be a complicated onboarding process for a merchant. Partnering with Stripe makes us a one-stop-shop. Merchants can onboard directly to Splitit and Splitit Payments powered by Stripe, and Stripe will be the technology behind our solutions. Merchants can now onboard in hours, where before it took weeks. For us, it’s about enabling scale.
