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A British rival to Swedish buy-now-pay-later (BNPL) giant Klarna has secured investment from eBay in a deal that valued it at $2bn (£1.65bn) valuation.
Zilch, a UK payments company founded in 2018, is understood to have received a low single digit million equity investment from eBay Ventures. The company declined to comment.
The business already has the backing of Goldman Sachs and received £20m earlier this year from current investors, maintaining its multibillion dollar valuation despite a wider fall in fintech stocks.
Zilch allows customers to delay payments, splitting them into four instalments over six weeks without charging interest. Customers can also pay upfront. If customers choose to defer payments, Zilch charges a fee of up to £1.50.
In some cases, Zilch will charge fees if the retailer is not a partner of the company. Brands also advertise through Zilch’s app.
Revenues for 2023 almost tripled, from £10.9m last year to £30m in the 12 months to March.
However, the company still reported a loss before tax of £72.1m, down slightly from £79.3m a year earlier.
Zilch claims to have over 3.3 million registered users.
Despite the rapid rise in usage, the BNPL sector has come under pressure as venture capital funding has dried up and interest rates have risen.
Klarna, the most established player in the fast-growing sector, was forced to trim its valuation by more than 85pc last year from $45.6bn to $6.7bn amid a tighter funding market.
The sector is also facing the prospect of new regulation amid concerns BNPL offers for fast-fashion are encouraging consumers to spend beyond their means, although a widely expected crackdown from the Treasury was delayed over the summer.
Labour has accused the Government of dragging its feet over the rules.
City minister Andrew Griffiths said in September the Government was still “considering stakeholder feedback”.
Philip Belamant, Zilch chief executive, said: “In Zilch’s financial year to March 2023, sales doubled, revenue tripled and gross profit increased fivefold to over £17m.
“Today, millions of adults trust Zilch daily to reduce their bills, build their credit and keep them protected wherever they choose to pay.
“With a strong balance sheet, Zilch is in growth mode and on course to hit bottom-line profitability in our core business in the near future.”
Zilch has been weighing up options for a future initial public offering, considering floating in either New York or London.
In August, Mr Belamant said he had seen “encouraging” signs from the London Stock Exchange in attracting new technology listings.
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