How Does Splitit Make Money? Business Model of Splitit

How Does Splitit Make Money

Splitit is a consumer-focused buy now, pay later company. Transaction fees are a big source of the company’s revenue. But the fintech company also makes money in a number of different ways from merchants.

Like most buy now, pay later companies, Splitit primarily makes money via merchant fees. However, Splitit also makes money on things like licensing their technology to other buy now, pay later companies, in-store payments, and B2B payment solutions.

Unlike other buy now, pay later companies, Splitit does not make money off of consumer interest rates or late fees. Instead of extending credit to consumers, they use customers’ existing credit or debit cards and simply charge them in installments.

Splitit has patented technology that blocks an amount of money on a user’s card and charges it according to the installment plan they’ve agreed to.

Founded in 2009 by Israeli entrepreneurs Gil Don and Alon Feit, the company was founded in Tel Aviv but is currently headquartered in New York City. Originally called PayItSimple, the company changed their name in 2015 to Splitit.

The company went public on the Australian stock exchange in 2019.

What is Splitit & How Does It Work?

Splitit is a fintech company that offers buy now, pay later solutions to merchants and consumers. Unlike many other buy now, pay later companies, they don’t charge interest or late fees to consumers.

Instead, their patented technology allows them to block off a certain amount of pre-approved credit on a consumer’s existing credit card or debit card. Over the installment period, the company can then charge the card according to the installment timetable the consumer agreed to.

Aside from that, Splitit’s buy now, pay later solutions work similarly to other providers in the sector. Merchants sign up to offer buy now, pay later options online or in-store. Companies then integrate Splitit’s technology into their checkout process. When consumers choose Splitit’s buy now, pay later option, the retailer pays a flat fee and/or a percentage of the value of the sale to Splitit.

With Splitit, companies can choose between the cheaper option where they allow their customers to pay them in installments and get those installments over time, or the more expensive funded version where they get the full amount of the sale immediately.

Merchants often choose to offer buy now, pay later options at checkout because studies have shown that they increase conversion and average order value (AOV). That leads to more sales for merchants.

Consumers meanwhile, can click on the Splitit option at checkout and sign up for a Splitit account. As Splitit uses existing credit, there is no need for a hard credit check before approval and no applications. Instead, Splitit’s patented technology simply determines the available credit on the customer’s existing credit card or debit card and blocks off an amount equal to what the customer is purchasing.

Customers can choose between 3,6, 12, and 24 installments based on how long they want to split up their payments.

The consumer then finishes their transaction and gets their product or service. The merchant is paid immediately or in installments depending on what they choose.


Business Model of Splitit

Splitit is a buy now, pay later company that processes installment payments on behalf of merchants. Their main source of revenue is, therefore, a flat fee and a small percentage of the total transaction that most buy now, pay later companies charge merchants.

Splitit also makes money in some unique ways. For example, they license their technology to other buy now, pay later providers. While other companies are focused on expanding into as many markets as possible, Splitit is making less capital-intensive income on their patented technology.

They currently license it to retailers so they can create a white label buy now, pay later service and to buy now, pay later companies in regions Splitit doesn’t currently plan to expand into.

Another interesting part of Splitit’s business model is that they have expanded into business to business (B2B) buy now, pay later solutions. This is uncommon for a consumer-focused buy now, pay later company as business to business payments are quite different than those focused on consumers.

They are so complicated, in fact, that any other popular buy now, pay later options for consumers have refused to enter the space. For example, Affirm spun off its B2B buy now, pay later option into a separate company called Resolve Pay.[1]

The challenge is that to be successful companies have to navigate the complexity of enterprise purchasing requirements and already existing and complex payment terms. Whether Splitit will be successful in their attempt to take on B2B payments remains to be seen.

The main challenge Splitit will be facing the consumer buy now, pay later space is that there is currently a lot of competition. While there is still untapped potential in the market, a number of strong competitors like Affirm, Afterpay, and Klarna are making significant investments in expanding into new industries and regions.

In order to understand how a company is doing relative to its peers in this space, it’s important to pay attention to three metrics: active merchants, active customers, and merchant sales volume. Splitit is lagging far behind many competitors on all of these metrics with just 1,250 active merchants, 330,000 active shoppers, and a merchant sales volume of just $396 million.

Splitit has also focused on a limited geographical region. Their services are currently available in the US, the UK, Canada, Germany, and Australia. Many of their competitors have expanded into more geographies.

That’s a challenge that Klarna is currently facing. After raising funds at a valuation of $45.6 billion in 2021, the company had to raise funds at a $6.7 billion valuation in 2022. That works out to a loss of 85% of its valuation in just a year.

The fact that Splitit’s business model is slightly different than its competitors because it is focused on using a customer’s existing credit rather than issuing new credit gives the company a competitive advantage. That insulates the company from potential future regulation of the sector.[2]

Splitit has a slightly different business model from its competitors in other ways, as well. No competitors currently license their technology via white label offerings for ecommmerce companies and buy now, pay later companies serving markets that Splitit isn’t in.

That creates another revenue stream that could grow in the future. This part of their business might prove to be particularly profitable in the future as buy now, pay later options become more prevalent. Indeed, many legacy financial companies or bigger payment companies like PayPal and Apple Pay are now offering Pay Later options.

Who will win the battle for market share in the buy, now pay later space is unclear. But Splitit has a few things that will like help it remain viable even if it loses out to its larger competitors. The company’s patented technology and different business model are one way it can stand out.

That said, Splitit has yet to prove profitable. Splitit also has considerable expansion, capital, and development expenses in a highly competitive sector. In 2021, Splitit brought in $10.44 million in total income up from $6.68 million in total income the year before in 2020. However, the company had $16.36 million in operating expenses during that same period.[3]


How Does Splitit Make Money?

Splitit makes money in more than four different ways. These include transaction fees, licensing their technology to other buy now, pay later companies, in-store payments, and B2B payment solutions.

Splitit does not break down the sources of their revenue in their Annual Report, so it is unclear how much the company makes on each of these individual revenue streams.


Transaction Fees

Splitit charges transaction fees to the merchant on all money that they advance to buyers. As they don’t charge fees to consumers, this is their main source of income.

They have two versions of their installment offerings: standard and funded. With standard, businesses don’t get the funds from the purchase upfront but instead receive them in installments as they are paid. With funded, businesses receive the payment immediately.

The cost of standard installments for merchants is 1.5% of the total transaction and a flat fee of $1.50 for each installment. Funded installments cost 2.5% for each installment. That means for 10 installments, a company would pay 25% of the total amount of the sale to Splitit.


Splitit Technology

Splitit licenses their technology to other fintech companies or buy now, pay later companies in other regions. This is in the form of a white label product that isn’t affiliated with Splitit in any of its branding. The company charges these companies a licensing fee for access to their patented technology.


In-Store Payments

Like many buy now, pay later providers, Splitit has begun offering in-store buy now, pay later options. Companies can integrate Splitit into their checkout, and consumers can choose Splitit as a payment option.[4]


B2B BNPL Payments

Splitit has begun facilitating B2B buy now, pay later transactions in addition to consumer-focused buy now, pay later transactions.[5]

It is unclear how much of their business is dedicated to these types of payments or whether they are currently a significant source of the company’s income.


Splitit Funding, Valuation & Revenue

Splitit is currently a public company on the Australian Security Exchange after launching an IPO in 2019. At the time, they raised AUD $12 million and issued 60 million shares at a price of AUD $0.20 each.[6] The company’s share price was AUD $0.26 in July 2022, with a market cap of $120.21 million.

Prior to going public and also post-IPO, the company has gone through six funding rounds and raised $264.6 million. Investors in the platform include Goldman Sachs Bank, and Woodson Capital Management.[7]

As of July 2022, Splitit had a market cap of $120.21 million. The company has significantly increased its revenue in recent years going from just $1.64 million in 2019 to $10.44 million in 2021. However, the company remains far behind other buy now, pay later companies in relation to revenue.

DateTotal RevenueOperating ExpensesNet Loss
2019$1.64 million$8.59 million($21.37 million)
2020$6.687 million$12.68 million($25.47 million)
2021$10.44 million$16.36 million($39.68 million)



Is Splitit Profitable?

Like most buy now, pay later companies, Splitit is not profitable. The company brought in $10.44 million in revenue in 2021 but had a net loss of $39.68 million. It’s unclear if Splitit will be profitable in 2022 and beyond.

Unfortunately, the company is in a capital-intensive and highly competitive sector. However, the fact that Splitit is worth just $120.21 million but has raised $264.6 million in venture capital and $12 million via its IPO does not inspire confidence.



In conclusion, Splitit is a unique and interesting business model that could definitely have its fair share of success. By allowing consumers to pay installments on their purchases without interest or fees, Splitit has the potential to attract a lot of customers who are looking for an affordable way to finance their purchases.

Only time will tell if Splitit will be able to compete with the likes of other installment plan providers, but we think they definitely have a shot.

Thanks for reading, and we hope you found this information helpful!

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