Big box retailers like Best Buy and Target have all kinds of financing card programs for their customers. But smaller and medium-sized merchants have no way to give their customers the same kind of financing plans.
Blispay is a new startup founded by Greg Lisiewski, formerly of BillMeLater, which was acquired by PayPal for nearly $1 billion in 2008. From that point, he served as global head of credit products at PayPal until the past year, when he went on to found Blispay.
The Baltimore-based company, which just received $12.75 million in seed funding led by FirstMark Capital, with participation from Accomplice, NEA and TriplePoint Capital, is now ready to come out of stealth.
Here’s how it works. Blispay signs on with merchants to offer financing programs that are free for the merchants and require no extra time or energy from the retail associates. These merchants simply hang signage that explains to customers that a financing plan is available to them.
When a customer walks into the store and either can’t, or doesn’t wish to, pay for the item in full on the spot, they can sign up for Blispay on their phone. The sign up includes a few minutes of fine-print reading and asks the user to include their name, email, password, phone number, address, DOB and Social Security number.
From there, it takes under a minute to either approve or decline the application for financing in most cases.
If accepted, the user can buy the item on the spot using their mobile phone, getting six months of interest-free time to pay for the product, if paid in full. After that six months, the user will pay back the loan on a 19.99 percent interest rate, which is relatively lower than the average 26 percent for other financing programs from big box retailers, but slightly higher than a traditional credit card (average 17 percent interest).
What’s more, after the user goes home with the initial product, they receive a Blispay Visa card in the mail to use on other purchases. The same six-month-interest-free deal applies to all purchases over $199, but the card can also be used for every day purchases like Starbucks, etc. The card also offers a flat 2 percent cash back program on all purchases.
Lisiewski explained that Blispay accepts the majority of applicants, but remains responsible with whom they offer credit so that the majority of those that use Blispay will be able to pay off their debts in the allotted six months.
On the backend, Blispay partners with a Utah-based bank called First Electronic Bank. When the original purchase goes through, First Electronic Bank pays Visa, which pays the merchant the next day, with both entities taking a small transaction fee.
A few days later, Blispay buys back the loan and bills the customer directly, receiving 100 percent of the purchase price, which is the way they generate revenue. Beyond that, they also receive most of the interest for users who either can’t or don’t wish to pay back the loan in the first six months.
Lisiewski says that Blispay has enough runway to set up programs with a few dozen (less than a hundred) merchants, but that the long-term goal is to be able to expand rapidly after picking up both merchant and consumer adoption.
You can learn more about Blispay here.