Zilch’s ‘BNPL 2.0’ Launches in the US with Cash Back, No Late Fees: Here’s the Details

A new BNPL service launched in the United States will not charge late fees and will offer cash back to its users.

Platform Buy Now, Pay Later (BNPL) Nothing launched a “2.0” business model in the United States that will not charge late fees or penalties, and offers cashback to consumers.

According to a BusinessWire press release, “Zilch is accepted wherever Mastercard can be used” and has more than 150,000 pre-registered customers for its service. Its customer base has grown to over two million in the UK since its launch almost two years ago. Zilch’s new model also aims to address certain BNPL risk factors that were investigated by the Consumer Financial Protection Bureau (CFPB) in late 2021.

The CFPB sent orders to vendors Affirm, Afterpay, Klarna, PayPal and Zip in December last year to gather information on BNPL’s risks and benefits, citing concerns that their business models were not unclear to consumers, charged fees that were too high, and allowed Americans to accumulate too much debt without being able to repay it. Zilch’s new BNPL model would offer 2% instant cash back and work directly with consumers, rather than partnering with retailers while charging no interest and no fees.

“[Consumers] are set up to fail and need more flexibility, especially during a cost of living crisis and a time of soaring inflation, to pay for goods and services how and when they want – with a system which avoids unnecessary and costly late payments and fees,” Zilch CEO and co-founder Philip Belamant said in a statement.

If you’ve accumulated debt from multiple BNPL purchases and are having trouble repaying it, consider using a personal loan to pay off the debt and avoid late fees. Visit Credible to find your interest rate on a personal loan without affecting your credit score.


‘BNPL 2.0’ could create a safer lending option for consumers

BNPL’s suppliers partner with retailers to allow shoppers to split the cost of their online purchases into installments at checkout. These interest-free payments are then generally due within weeks of purchase. However, missed payments may result in late fees or other penalties. The CFPB investigation aimed to determine whether BNPL programs do more harm than good.

“If a consumer has multiple purchases over multiple schedules with multiple businesses, it can be difficult to know when payments are scheduled,” the CFPB previously said. “And when there is not enough money in a consumer’s bank account, it can lead to charges by both the consumer’s bank and the BNPL provider. Due to the ease of obtaining of these loans, consumers may end up spending more than expected.”

Zilch uses “a mix of Open Banking technology” and flexible credit checks alongside its own data to visualize the financial health of consumers. The company also partners with Experian to flag payment plans, allowing BNPL providers to track their payment plans. The three credit bureaus — Equifax, Experian and TransUnion — have recently began to calculate BNPL payments when determining a consumer’s credit score.

“Including point-of-sale loans, including BNPL, in credit reports and other risk management tools can help tens of millions of consumers access more credit opportunities and potentially get better loan terms,” ​​said Liz Pagel, senior vice president of TransUnion.

If you want to pay off your BNPL plans, consider taking out a personal loan to pay off your debts. Visit Credible to compare multiple lenders at once and choose the one with the best mortgage rate for you.


Consumers Paid $120 Billion in Late Fees to BNPL Providers in 2020, Zilch Says

Late fees on BNPL products continue to accumulate, according to Belamant, reaching an “unacceptable” level. He said that in 2020 alone, US buyers shelled out $120 billion for such charges.

“They are set up to fail and need more flexibility, especially during a cost of living crisis and a time of soaring inflation, to pay for goods and services how and when they want – with a system that avoids late payments and unnecessary and costly expenses,” he said.

If you’re looking for another credit option outside of BNPL services, consider taking out a low-interest personal loan. Contact Credible to speak with a loan expert and get all your questions answered.

Do you have a financial question, but you don’t know who to contact? Email the Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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