Amazon Invests in Bill Me Later
Terms of the deal were not disclosed, but Bill Me Later raised a whopping $72 million last quarter and has raised $200 million in total from Azure Capital Partners, Chase Paymentech, Crosspoint Venture Partners, First Data Corp., and others. It also secured a $640 million debt financing a year ago. That is a lot of capital, but as a financial firm, it is taking on a lot of risk.
The way Bill Me Later works is you enter your birth date and last four digits of your social security number online, and it does a credit check on you in three seconds to determine whether you are worth the risk. Bill Me Later pays the merchant, and sends you a bill. According to the Baltimore Sun, about 3 million people have signed up so far, and the company is on track to pull in over $100 million in revenues this year. It must have some really sophisticated algorithms to make that credit risk decision on the fly. For people still not comfortable using a credit card to pay online, this type of service removes any remaining friction in e-commerce. I wonder what its default rate is.