Zilch and the Infrastructure Behind Digital Consumer Credit

Executive Summary

Buy now, pay later describes the product Zilch sells; the system underneath is a credit decision taken inside a payment event. Zilch owns the customer app, the virtual card programme and the logic that decides who is lent to. It depends on others for the card scheme, the securitised funding that carries the balances and, in the United States, the bank that makes the loans. Its accounts for the year to 31 March 2025 show £110.3 million of revenue on £1,893 million of gross merchandise value, and by calculation customer-paid credit fees were 69% of that revenue, so "interest-free" is accurate but incomplete.

From 15 July 2026 the UK deferred payment credit regime makes the affordability step of the chain a rule-bound one. The infrastructure is the checkout decision; the credit product is whatever the repayment data afterwards can support.

Introduction: What Does "Pay Later" Leave Out?

The usual account of Zilch is a shopping app that lets customers pay later. That describes the surface and skips the machine: a purchase is a payment event, and Zilch places a lending decision inside it before the money moves. This article maps that chain from consumer to repayment and marks which steps Zilch controls and which it rents.

The founder history sits in the profile of Philip Belamant and Zilch, so this piece starts at the mechanism. It also applies to a credit operator the infrastructure lens used across the pillar on diaspora operators and the systems they build.

What Is Digital Consumer Credit Infrastructure?

Digital consumer credit infrastructure is the set of systems that lets one firm decide on, fund, issue and collect a consumer loan inside the same digital event that moves the money for a purchase. The useful way to read it is as a chain with six links: the consumer, the payment, the credit decision, the risk assessment, the transaction and the repayment.

Two terms carry the analysis. Credit decisioning is the rule or model that approves, limits or declines a customer. Risk assessment is the evaluation of the likelihood of loss that sits behind that decision, built from the data the lender can read. A pay-later product runs the whole chain at the speed of a checkout, which is why the infrastructure, rather than the loan terms, is where firms differ.

The verdict for this section: credit becomes infrastructure when the decision, the payment and the repayment run as one system rather than three separate products.

How Does a Credit Decision at Checkout Work at Zilch?

What does the customer actually hold?

According to Zilch's annual report for the year ended 31 March 2025, customers use Zilch "via a virtual payments card designed for online and in-store purchases". The report lists the plans as paying over six weeks, paying over three months, or paying now. The company's product announcement, listed on its news page as 13 August 2026, adds Pay Monthly over three, six or twelve months with fees shown upfront, and Advance, which lets eligible customers access up to £100 of salary up to seven days before it arrives, repaid automatically when income arrives (Zilch).

The same announcement says Advance and Pay Monthly operate within a customer's existing, fully regulated Zilch credit agreement, and that the products are rolling out progressively over the coming months. That wording reads as a standing credit agreement with each purchase or advance drawing on it, rather than a fresh loan decision at every till. Zilch's published materials do not describe how a limit is set or revised per purchase.

What data does the decision read?

The annual report names "assessing the affordability and credit score criteria for new customers" as a control on credit risk, and the chief executive's review describes integrating "credit bureau data, open-banking information". Open-banking data is bank-account data shared with the customer's consent; a credit bureau supplies a score and file history. The report does not publish the decision model, its thresholds or an approval rate, so the mechanism can be mapped but not benchmarked.

In the United States the same step is described more thinly. The Zilch US site says the rate "will be 0% APR and is subject to an eligibility check" and does not say whether that check is a soft or hard search (Zilch US site). The six-week plan there takes 25% or 50% of the purchase upfront, plus any fees, and splits the rest into three instalments paid every 14 days.

The verdict for this section: the decision is a standing relationship that products draw on, and the data feeding it is largely rented from bureaus and banks.

Which Steps Does Zilch Own, and Which Does It Rent?

The table sets each link in the chain against what Zilch's published materials show it holding itself and what it depends on others to supply.

Two readings follow. The first is that Zilch has moved up the payment stack. The company said in December 2025 that its payments licence removes reliance on third parties and lets it build payment methods in-house, and that it secured Visa Principal Membership at the same time, according to CrowdFund Insider's report of the announcement. The second is that the capital is rented: the receivables are financed in part by securitised debt rather than by equity alone.

A comparison shows what is distinctive. In Zepz's wallet and credit economics, the transfer is the rail and the balance beside it is where credit might later sit, but the credit product is paused. Zilch begins from the opposite end: credit is live, and the payment is the vehicle that delivers it.

The verdict for this section: Zilch controls the decision and the customer relationship, and rents the scheme, the capital and, outside the UK, the lender of record.

Where Does Zilch Earn Money Inside the Transaction?

The annual report splits FY2025 revenue into four lines. The table adds two calculations: each line as a share of total revenue, and each as a share of gross merchandise value (GMV, the total value of purchases made through the platform, reported as £1,893 million).

Each line is a different party paying for a different step. Credit revenue is fees "paid directly by the customer on checkout", and the report's note says it arises where "the rate agreed with the merchant is too low to fully subsidise the cost of the transaction for the customer". Transaction revenue is interchange, the fee passed between issuing and acquiring banks on a card payment, which the report says is paid to the group "by the relevant card scheme". Advertising revenue includes affiliate fees, defined as marketing fees paid by merchants in exchange for successful checkout. Feature revenue includes snooze fees, charged when a customer delays an eligible instalment.

The report also states that the group "does not charge interest or impose late fees on customer loans". Together these facts correct the shorthand. The product carries no interest, but the largest revenue line is a customer-paid fee, and merchants pay for access to the customer base through commissions and marketing fees. The report does not show how any merchant subsidy of credit cost is booked, so the split between customer-paid and merchant-paid economics cannot be read from the revenue lines alone.

By calculation, revenue was 5.8% of GMV (110,333 divided by 1,893,000). The report states credit losses relative to GMV of 1.5%, up from 1.2%. The income statement's provision for credit losses of £27.4 million, divided by GMV, gives 1.4%, and the report does not say how its 1.5% is defined. Revenue exceeded that provision by about £83 million (a calculation), yet the group reported a loss before tax of £10.5 million, so costs other than credit losses took the difference; the revenue lines do not itemise them.

The verdict for this section: revenue covered the credit-loss provision about four times over (110.3 divided by 27.4, a calculation) and still did not cover the whole cost of running the chain.

Who Funds the Balance, and Who Carries the Loss?

The report defines credit risk as "the risk of loss to the Group from the failure of customers to fully repay their obligations", which places the loss on Zilch rather than on a bank partner. The funding is a separate matter. The chief executive's review cites a "£150m securitised debt deal, led by Deutsche Bank", and a note records £28.5 million undrawn at 31 March 2025. A securitisation is a financing structure in which loan receivables are placed in a special-purpose vehicle that borrows against them; the report describes its earlier borrowing vehicle, Zilch Finance 2 Limited, as a special purpose entity owned and managed by Wilmington Trust (London) Limited.

The balance sheet shows consumer loan receivables of £112.8 million. As a calculation, that is 6.0% of FY2025 GMV, or about three weeks of annual spend outstanding on the year-end date; it is a snapshot, not an average, so it indicates the short duration of the plans rather than measuring it. In December 2025 the company said it had raised more than US$175 million of debt and equity in the preceding months, including an expanded securitisation led by Deutsche Bank (CrowdFund Insider); the annual report gives no figure for that expansion.

The economic consequence is that a lender which bears its own credit loss and funds through a securitisation depends on that funding line as much as on its decision engine. The verdict for this section: Zilch owns the risk and rents the capital, and the second dependency is as structural as the first.

How Does the UK Deferred Payment Regime Change the Chain?

The Financial Conduct Authority published policy statement PS26/1 on 11 February 2026, and regulation of deferred payment credit (DPC) began on 15 July 2026. The FCA describes DPC as an interest-free credit product repayable in 12 or fewer instalments in 12 months or less, and as the legislative name for the product more commonly known as buy now, pay later (FCA PS26/1). A DPC lender must hold authorisation for the relevant consumer credit activities or a temporary permission, and must give clear information, lend responsibly and affordably, support customers in financial difficulty and, if fully authorised, provide product sales data on its DPC lending (FCA). Merchants offering their own DPC and the broking of DPC agreements are outside the regime.

For the chain, three links change character. The credit decision must now evidence affordability, the repayment step must include support for customers in difficulty, and the whole product gains a regulatory data output. Zilch's annual report says it has been authorised by the FCA for consumer credit since April 2020, and its August 2026 announcement frames Advance and Pay Monthly as inside a regulated agreement. Neither source describes the firm's position under the DPC rules in detail, so this piece draws no conclusion on how the rules bind its specific products.

The verdict for this section: regulation turns the affordability test from a design choice into a mandatory, auditable stage of the chain.

Where Does the Zilch Model Fit Among Credit Rails?

The Zilch chain is one of several ways to attach credit to a transaction. A card-first lender such as the one examined in the analysis of Plata's first-time cardholder credit faces the same design question with a different control: that article treats the contractual right to raise or cut limits as the real control. Because Zilch's newer products sit inside a standing agreement, it reads nearer the card-limit model than the per-purchase label suggests.

What happens to repayment data after the decision is the credit-file side of the chain. The published materials do not say whether or how Zilch furnishes repayment data to credit reference agencies, so that step is not assessed here. The mechanics of capture, standardisation and reporting to bureaus are mapped for rent payments in the analysis of Esusu's rent reporting chain, and they are the step that decides whether a pay-later history can ever support a larger credit product.

The boundary matters. This article does not assess whether pay-later products are advisable for consumers, the wider consumer credit problem, or the company's operating choices; those belong to other nodes in the graph. It describes how the chain is built and who holds each link.

The verdict for this section: the Zilch chain sits nearer the card-limit model than its per-purchase label suggests, and what sets it apart is which links Zilch holds and which it rents.

Why This Matters for Product Leads and for Credit and Capital Teams

For technology and product leads embedding credit at checkout, the chain poses four ownership questions that the Zilch accounts answer in one case. Who is the lender of record in each market, which party is the card scheme, where does the decision sit and who can change it, and who carries the loss. A product whose US loans are made by a bank partner and whose UK credit agreement is a Zilch agreement has two different compliance and funding architectures behind one interface.

For credit, risk and capital teams, the figures set the terms. A revenue yield of 5.8% of GMV against credit losses of 1.5% leaves a margin that must also pay for funding, marketing and operations, and the report says of the Deutsche Bank-led facility that it "runs to 2026" and that the size and availability of funding "will always remain key risks". The question is not only whether the decision engine approves well, but whether capital stays available at a price the take rate can bear.

Key Takeaways

• A pay-later checkout is a credit decision taken inside a payment event, and the infrastructure is the chain from consumer to repayment, not the loan terms.
• Zilch owns the customer app, the virtual card programme and the decision criteria, and relies on others for the card scheme, bureau and open-banking data, securitised funding and, in the US, the lending bank.
• In FY2025 customer-paid credit fees were 69% of Zilch's revenue by calculation, so a product with no interest and no late fees still charges customers where the merchant subsidy falls short.
• Zilch bears its own credit loss and funds receivables through a Deutsche Bank-led securitisation, which makes the availability of capital as important as the quality of the decision.
• From 15 July 2026 the FCA's deferred payment credit rules make affordability, support in difficulty and product data mandatory stages of the chain for in-scope lenders.

Conclusion

Read as a chain, Zilch is a decision engine and a card programme sitting on top of other parties' scheme access, data and capital. The accounts show where the money is made: customer fees, interchange and advertising revenue, in that order. The regulation now fixes what the decision must prove. The infrastructure is the checkout decision, and the credit product is whatever the repayment data afterwards can support.