Page 20 - Pay Magazine s2014

companies & people
Innovators’ Spotlight: Know Your Audience
SEcrEt SaucE
Using employment data to grant no-cost credit with- out a credit check and never charging fees, interest or penalties.
GEttiNG tO KNOw
Zebit
Location
La Jolla, Calif.
Open for Business
2015
Founders
Michael Thiemann and Marc Schneider
Funding
$10 million in Series A nancing.
Business Model
Offering no-cost credit to under- served Americans as a component of a nancial wellness bene t through employers. Credit can be used to nance purchases over time without paying interest from the Zebit Market or retailers that accept Zebit as a payment method. Zebit earns revenue from the mar- gin on products and the retailers trying to reach a previously credit- less market.
Business Philosophy
Be free. The 0 percent APR nancing and nancial education are always free.
Something You Might Not Expect
Zebit’s e-commerce marketplace, Zebit Market, never marks up products above MSRP.
For years companies have tried to crack the credit conundrum of millions of nancially under-
served Americans, who have jobs and earn regular income but have di culty obtaining credit and saving money for large or unex- pected purchases. A new entrant in the space is La Jolla, Calif.-based Zebit Inc., which o ers zero-inter- est nancing for purchases without credit checks, fees or penalties. The key to the company’s approach lies in distributing its services through employers and using payroll information as an alterna- tive measure of creditworthiness.
Purchasing Power
Zebit-enrolled employees are granted no-cost credit, known as a ZebitLine, calculated as 5-10 percent of gross annual income. If a purchase is made, repayment occurs on each pay date through automatic deduction from the
employee’s pay- checks or a pay- ment card over the ensuing six or 12 months. Currently, members can make purchases from Zebit Market, an online store o ering items ranging from TVs to large appli- ances to handbags, from national brands such as Bose, Canon, Frigidaire, Sam- sung and Sony.
The average or- der value is more than $900—and,
crucially, Zebit doesn’t charge interest or mark up prices on items beyond a manufacturer’s suggested retail price, notes company CEO and founder Michael Thiemann. Instead, Zebit acts like a whole- saler, earning pro t on the margin and on fees merchants pay to access Zebit’s customer base. While currently ZebitLine only
may be used to purchase items sold in the Zebit Market, the company has its eye on expanding to merchants directly by o ering ZebitLine as a payment option at checkout alongside traditional payment cards and other services, like PayPal.
A young company focuses on connect- ing employees and zero-interest nancing without rankling regulators.
Using employers as a distribution channel is mutually bene cial to Zebit and its corporate clients. For Zebit, o ering its services through employers not only helps reduce risk and ensure purchases will be repaid but also lowers the com- pany’s cost of customer acquisition.
While there has been some contro- versy around payment products linked to paychecks, Thiemann is con dent Zebit bene ts all parties involved. “We’ve worked hard to design Zebit so everybody wins: employees, merchants and employ- ers,” he says.
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