Brad discusses FinTech in the context of high ticket e-commerce.
Sramana Mitra: Let’s introduce our audience to you as well as Splitit.
Brad Paterson: We are a global installment payment company. We are the only installment payment company that allows consumers with a credit card to split a payment into installments and pay over time. We allow you to use your credit versus obtaining a new credit.
I’ve spent over 20 years in financial technology and payment companies. My early career was in Visa, Paypal where I worked for 7 years, and Intuit. I’ve spent a lot of my career in Asia Pacific. I moved to the US four years ago. I’m an Australian native, so I’m a long way from home.
Sramana Mitra: What prompted you to start Splitit? What was your analysis of the gap in the market?
Brad Paterson: The gap in the market is that consumers wish to pay for items over time. Purchasing goods on credit is often needed. The cash crunch that comes in the next 30 days before they pay interest is significant.
Our founders are both from Israel. You could split every transaction into multiple installments and pay over time. You could not do that in e-commerce because of the banking infrastructure. Then we realized that you couldn’t do this in most places in the world, so we developed technology using the credit card system to allow consumers to make purchases on their credit card.
We would hold the limit on their card to protect them from over committing, but we would only charge their card in monthly installments. It helps them manage their cash flow and it helps retailers drive more sales.
Sramana Mitra: To do this, do you work with the consumer side or do you work with the retailer side?
Brad Paterson: We’re a two-sided network. Our customers are the retailers. Retailers sign up to our platform. Anybody with a credit card can use Splitit. You don’t have to sign up for an account. Your account is with the financial institution that issued you the credit card. We communicate with those customers by capturing their email address or phone to manage those installment payments.
Our main customer is the retailer who signs up for our platform. They then offer Splitit on their website and customers choose to pay in installments by Splitit.
Sramana Mitra: Let me see if I understood this right. You work with the retailers; your customers are the retailers. You take a high-ticket item that a consumer wants to buy and you split that up into an installment payment set, and then your software charges that customers’ credit card in installments.
Brad Paterson: Correct. Imagine a $1,200 bicycle becomes $100 a month over 12 months. You pay with your credit card. We hold the funds on your card, but we only charge that card monthly.