Phil Belamant

Published: 21/10/2021

There is a place for debt. Many people wouldn’t own a home, a car or have an education without it. However, it has to be done right, says Philip Belamant, CEO & Co-founder of the ‘buy now, pay later’ consumer credit provider Zilch. Too many BNPL models focus on the retailers and let people buy more ‘things’ regardless of affordability; in contrast, Zilch is focused around the needs of the customer – part of a new wave of ‘responsible consumerism’.

Zilch, which launched in 2019, has been designed to help consumers spend responsibly and avoid debt problems. It works directly with the consumer, a notable shift from other ‘buy now, pay later’ services that work with retailers. To date, the retailers are the real customers of many credit providers, offering payment installment plans as the shopper checks out. This creates a difficult conflict of interest.

Zilch doesn’t go via the retailers, but direct to consumers. That creates a more comfortable alignment that works for the customer, not the other way around, says Philip. Zilch’s customers do their full signup with Zilch, KYC onboarding, identity verification, agree to the terms and conditions, and understand what the product is, rather than at the point of sale, as it is for some other credit providers. That way, he says, people understand it’s a debt product that can help them manage their cash flow, not just pay over time with specific retailers.

How it started

Philip has considerable pedigree in building and scaling a business of this kind. After university, he started a mobile gaming company. These were social games, using airtime credits to play the game. “We discovered that people were transferring a lot of airtime credits, and had interest in using airtime to win prizes rather than spending hours playing a particular game. People, in effect, were using it as a mobile payment system. We stopped focusing on the games and started spending time building a way for people to trade airtime or use it to enter competitions.”

It spread across 22 countries in Africa. He says: “If you look at a lot of these countries you have a lot of unbanked people. People that are budgeting for everything are some of the most financially astute people, so the last thing they wanted to do was pay a bank for the privilege of taking their money and giving it back to them.”

His father was running a card-based business doing social welfare distribution. He reversed the business into this which was Nasdaq listed. The combined group had mobile and card technology and at its peak, was worth about $2.2bn.

Philip’s ambition was to take the lessons from building this business in Africa to developed markets. He saw many of the same problems – poor access to credit and people being ripped off by payday lenders and in some cases, banks.

How it’s going

Zilch’s business model has been designed to be scalable; it doesn’t need armies of sales people to keep its retailers happy. This is seen in Zilch’s astonishing growth rates – when we spoke, running at around 35% a month, compared to 100% a year for its peers, with 160,000 registrations a month and recently surpassing 1 million registered customers in a record 13 months.

He says: “People use Zilch more times in a month than they use our key competitors in a year. We are up to 5x bigger than they were at the same stage. From here, we want to take it to other markets. It is going live in the US very soon. From there, we will make further use of our ‘light touch’ model to continue scaling. We aspire to be in more than 20 countries over the next few years.”

Linking the loan to specific purchases changed the credit analysis. He says: “With revolving credit or payday loans, you have no idea what people are doing with the cash. In this case, you’re financing a transaction. It gives you a lot more data to underwrite the transaction.” He had already had a similar business as part of his product, Umoja Manje in South Africa. It had been one of the biggest products for the group and was responsible for closing down numerous payday lenders in South Africa within a year, something of a personal mission for Philip at the time.

The pandemic created its challenges and opportunities. On the one hand, people had more disposable income during Covid than they’d ever had: they weren’t travelling, going to the pub or the cinema so their propensity to pay back debt increased. While it diminished their need for credit, at the same time ecommerce usage jumped higher, which was a significant benefit for the group.

Lessons learnt

Is there anything he has done differently this time round? Plenty, he says. “The most important thing in both cases was to have the right people. It was more difficult the first time round – I was only 22 with no track record and had to sell the vision. Zilch has such a phenomenal amount of talent. We have also been unafraid to pivot – taking the good, throwing away the bad and making it brilliant. The first time really helped me understand how to scale something internationally. Africa is not one place; there are so many different languages and cultures. That will serve us well for the aspirations we have for Zilch as we look to expand internationally.”