As POS Credit Gets More Crowded, Splitit Adapts the Concept for B2B Payments

Familiar now as a point-of-sale payment option, transactional credit is moving into the much larger—and more complicated—world of business-to-business payments. Splitit Payments Ltd. announced on Monday it has launched a service that allows merchants and other small businesses to pay suppliers with regular, interest-free installments on an existing business credit card.

Calling its new Splitit Business Payments service an extension of its consumer-based installment-credit platform, New York City-based Splitit says the service allows sellers to put a hold on the buyer’s business card instead of taking a deposit. Beyond that, when the seller charges the first installment, Splitit decreases the hold on the account by the amount of that payment. The process then continues with monthly installments until the supplier is paid in full. Splitit says it charges neither interest nor factoring fees.

“The $120 trillion B2B payments market has suffered from a lack of innovation for decades,” said Gil Don, chief executive and co-founder of Splitit, in a statement. “With Splitit’s patent portfolio for credit card-based transaction financing, we can finally get beyond antiquated invoices, purchase orders, credit verification, factoring, payment/collection systems, and overstaffed accounts-receivable departments.”

Don is stepping down as CEO Oct. 1 to become general manager for the company’s EMEA region. Brad Paterson, currently managing director for North America, will take over as CEO.

Splitit’s extension into business payments comes as consumer-based transactional credit is drawing more interest from merchants and payments players. PayPal Holdings Inc. is a long-time provider in the field with PayPal Credit, but it faces increasing competition, including from newer entries such as Affirm, Greensky, and Klarna, in addition to Splitit. In April, Mastercard Inc. announced it had entered the market by acquiring Vyze Inc., yet another POS-credit platform. And in June Visa Inc. said it will introduced application programming interfaces in January that will link merchants to Visa issuers to enable POS credit transactions.

Indeed, the movement by businesses and cardholders to transactional credit is such that, in the wider market of personal loans, fintechs now control more of the market than do banks, according to the credit-reporting giant TransUnion.

Founded in 2009, Splitit says it works with more than 500 merchants in 27 countries. Now the new B2B service is moving the company upstream to the suppliers to those merchants. In its announcement, it cites New York City-based Miz Mooz, a shoe manufacturer, and Ocean Rodeo, a sports-equipment supplier based on Vancouver Island, British Columbia, as clients. 

“In the past, when a client orders $10,000 worth of shoes, we’ve used credit cards to have them prepay for goods that may take 30 to 90 days to sell,” said Miz Mooz president Ron Kenigsberg, in a statement. “But, when we’re ready to ship, we sometimes receive calls from our clients asking for us to hold or split up the shipment into multiple parts so they can cover the cost of the goods. The problem is, it’s more work and expense for us to split up the shipment, hold the goods and then have repeat conversations about when to charge them and ship the next batch.”