Alternative Finances

Transactional Credit Comes To Main Street Merchants

When most laymen hear the term “alternative financial services,” they immediately envision consumers (and small businesses) that are underserved by the traditional credit markets and either unable to secure credit along “mainstream” channels or unable to do so without facing a difficult or time-consuming process.

This is not an entirely inaccurate mental image. The description certainly covers a portion of the alternative lending space and a significant portion at that. But it is not the entirety of marketplace, notes Blispay ( Founder and CEO Greg Lisiewski. There is also a world of consumers who are perfectly able to get mainstream credit but who could benefit from a better stream.

“There is demand across the entire credit curve for deferred payment terms — financing. Lots of people think this is just for people with no alternative, especially when you wrap the label ‘alternative payments’ around it. But the reality is: There are a lot of people who think this is a smarter way to shop or a better way to manage cash flow.”

Offering consumers that better way to shop and manage cash flow and offering smaller merchants a crack at providing the type of financing that larger-scale operations can offer with their branded cards is what Blispay exists to do.

And it is a service that Lisiewski knows more than a little about. He was an early member of the team of Bill Me Later, a merchant-backed finance platform snapped up by PayPal in 2008 for $1 billion. Lisiewski went on to be the head of global credit products at PayPal until last year when he decided it was time to do something really different.

“I figured, if I was going to go small, I was going to go all the way back to the beginning and start from scratch,” he told PYMNTS in an interview. “It’s a learning experience, but it is incredibly enjoyable.”

“I had a great team at PayPal, and we were doing some cool things. But, as big companies go, it became more about the process and influence than it became about building.”

Blispay, on the other hand, has been all about buildup until now — as it has been in stealth mode — and will continue to be about building as it “lights up” its first few pilot runs of its platform.

And that platform exists, Lisiewski explained, to solve the two problems that he walked out of PayPal appreciating more fully than ever. The first was the aforementioned lack of choice on the customer side; the second was an issue of access for small and medium businesses.

“I thought about my experiences. There is really a double-sided problem. There is a huge market with consumer finance being underserved because all of these millions of merchants — Main Street merchants — who don’t have access to offering financing with favorable payment terms —six-month no payments, no interest if paid in full. They don’t have access because bigger players either don’t offer it to them at all or charge quite a bit for it.”

Blispay acts as the third party that allows smaller merchants to offer that financing — without having to do anything other than make consumers aware that credit is potentially available by accessing Blispay’s mobile app.

“Now that mobile phones are ubiquitous, there is a chance to deliver an actual transaction account anywhere a person is, period. By building it on top of an existing payment network, Visa, I knew we could bring the product to merchants without a lot of integration investment on their part.”

Blispay’s platform allows consumers to make the purchase on the spot but also sends those who enroll and are accepted online a Visa card that can be used anywhere. Those cards also offer interest-free financing on purchases of $199 or more and include a rewards program with 2 percent cash back on all purchases.

“You might open a Blispay account at a garden center in Long Island because you are doing your spring purchases — grabbing lawn furniture and mulch and flower and spending $500. We solve that first purchase by offering interest-free financing on that for six months and then a card that allows that same customer to get the same deal at another Main Street merchant.”

Lisiewski noted that Blispay accepts the majority of applicants and that the product is pitched at prime credit users. He also noted that the majority of applicants will likely pay off their debt in the six-month window.

Going forward, the firm has just snapped up $12.75 million in seed funding in a round led by FirstMark Capital, with participation from Accomplice, NEA and TriplePoint Capital.

Those funds will go toward hiring more engineers and perfecting the product throughout 2016 during its pilot run.

“We are hoping to prove our hypothesis by the end of summer and hope to start significant scale by holiday season of 2016.”

Lisiewski noted that, if that target is not hit, Blispay is hoping to get to scaling in early 2017.


Featured PYMNTS Study: 

With eyes on lowering costs to improving cash flow, 85 percent of U.S. firms plan to make real-time payments integral to their operations within three years. However, some firms still feel technical barriers stand in the way. In the January 2020 Making Real-Time Payments A Reality Study, PYMNTS surveyed more than 500 financial executives to examine what it will take to channel RTP interest into real-world adoption. Here’s what we learned.

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