How Does Sunbit Make Money? Business Model of Sunbit

How Does Sunbit Make Money

Sunbit, founded in 2016, is a buy now pay later technology company that offers immediate approval for shoppers in need of quick funds. The company is driven by its mission is to provide funds for essentials such as dentist visits and car repairs. They believe that there are enough companies that provide access to funds for luxuries but not for necessities.

But, how does Sunbit make money? Sunbit operates on a fintech buy now pay later service business model. Sunbit makes money by charging merchants 2–8% fees on the purchase amount and charging customers up to 36% interest fees on the loan amount.

Business Model of Sunbit

I’m sure you’ve been hearing a lot about “buy now, pay later.” It’s the hottest topic in the fintech world right now. But if you’re like most people, you’re confused. What is it? How does it work? Why does it matter?

Let’s dive into SunBit’s business model to understand all of that:


We have heard of many startups that started because of some inconvenience faced by the founders. Sunbit is another such example.

Tal Riesenfeld, the founder and an immigrant, started Sunbit because he was rejected a credit card for not having a credit history. He thought that there must be others like him and decided to make the availability of funds easier for everyone with this company.

Sunbit enables users to secure instant funds online. Sunbit offers instant loans from $50 to $10,000 for customers with a flexible repayment period of 3, 6, 12 and 24 months. It charges an Annual Percentage Rate (APR) for these loans which ranges from 0%-35.99%.

It also has an application for customers through which they can keep track of the payments. Furthermore, it provides merchants with a tablet and a scanner and provides training to store associates on its usage.

The benefit of the tablet that Sunbit provides to retailers is that it makes the process paperless completely. Additionally, it makes the entire process faster and more reliable. Moreover, the associates who are trained by the company can persuade the customer to purchase through Sunbit.

Post the purchase, the merchant scans the ID card of the customer through the tablet. After this, the algorithm developed by Sunbit takes over. It conducts a soft credit check and calculates the maximum amount of funds that the customer is eligible for.

The credit check takes place in just 30 seconds. The company is able to do this because of their machine learning platform. With machine learning distributed throughout the organization, Sunbit is able to approve 90% of customers — the highest in the industry.

The customer then enters the purchase amount and pays the down payment. Next, the shopper chooses to make repayments over 3, 6, 12, or 24 months.

Sunbit pays the merchant on the next business day when the purchase is made. It then collects the amount from the customer over a period of time.

The loans are made by the Transportation Alliance Bank, which determines the qualifications of the customer and terms of credit.

Merchants need to be partnered with Sunbit in order for customers to use the platform. Its main partners are automotive repair shops, dentists, and eyewear companies.

Another benefit of using Sunbit is that it does not charge any late fees or deferred charges from the customers if there is a delay in payment.


Marketing & Target Customers

Sunbit intends to market its products through its branding in the retailers’ stores. When a customer enters the store they’ll get to know that an alternate mode of payment like Sunbit exists through standees and posters. Even if the customer enters the store with a mindset to not purchase anything, seeing this alternative might change their minds.

Their target market also includes those with subprime credit who have historically been unable to get financing. Sunbit does not discriminate against people with a low credit score.

Moreover, the company is working on building a dealer directory. Suppose, you’re a customer and you got your car fixed and paid through Sunbit. A few months down the line if you need an eye doctor you will be able to see various doctors in your area. Basically, they are building a referral system that will benefit both Sunbit and the associated merchants.

On the merchants’ side, they are trying to target retailers that have been so far overlooked by the buy now pay later boom. Most players are courting the biggest retailers as a way to scale quickly and diversify their partnerships. This leaves a huge untapped market of non-discretionary and small businesses which Sunbit is targeting.

They initially worked with local businesses but they now also have partnerships with national level merchants like Honda Motor, Kia Motors, Cycle Gear, and Eyemart Express.

Sunbit currently has a network of ~7,300 merchants in 46 states. Since its inception, they have carried out ~400,000 transactions.



Running any business involves expenses. Now, let’s take a look at the various expenses that Sunbit might be incurring:

  1. Marketing: The cost incurred to acquire new customers is high for any business but especially high for startups. Onboarding new merchants would be a tricky and expensive task. This would include costs of advertisement, sales promotion (cashback), etc.
  2. Technology Costs: Since they have an application through which customers can track their repayments the cost of managing that app would have to be incurred.
  3. Bad Debts: Sunbit is a company that gives out loans to people and every once in a while there would be someone who does not pay back. Hence, bad loans will add to the cost of the company. There might also be the cost associated with trying to retrieve the lost money.
  4. Management Costs: Basically, these would include the administrative costs, salaries, rent, utilities etc. Everything that is necessary to operate any business.


Plan for Profit

Bringing more merchants on board will help Sunbit to increase its profits. There is a direct correlation between the number of merchants and Sunbit’s revenue. More merchants would bring in a higher number of customers which would lead to more transactions, hence more revenue.

Moreover, tying up with national-level merchants would help in increasing the customer base drastically because of the higher footfall.


How Does Sunbit Make Money?

Let’s take a step back and look at who Sunbit actually works with: merchants and customers. Merchants are the companies or individuals that sell things online, and customers are those people who buy from them.

The company has multiple revenue streams from both customers as well as merchants. It earns from the merchants it onboards on its platform. They also benefit by tying up with Sunbit. On the other hand, it also earns from the customers who use its facilities to pay for their purchases.

Sunbit earns revenue from both, merchants and buyers. It charges merchants a transaction fee, a percentage of the purchase amount. The percentage varies from the risk of the customer. They also charge a monthly technology fee for some industries. The company also earns from the customers through interest charged on the loan amount.

This way, Sunbit earns money as a buy-now-pay-later solution provider that helps merchants sell more items to their customers through their website and mobile application platform, while allowing customers to make purchases they otherwise can’t afford.

Let’s look at each of its revenue sources in further detail.


Transaction Fees

Merchants usually pay a charge ranging from 2 to 8 percent of the purchase amount. The charge varies depending on the location and the risk associated with lending to the customer. Sometimes they also charge a flat fee of 30 cents per transaction.


Technology Subscription Fees

Sunbit also charges a monthly subscription fee from its merchants for the facilities it provides to them.

They provide a tablet, scanner, and training to associates. The company also assigns an account manager and partner success manager to each merchant. They visit merchants in-person to train and certify employees to offer Sunbit technology.

They also provide digital marketing resources to merchants. They provide all the creatives to equip the marketing teams of the merchants.

Sunbit provides retailers with in-depth insights about their store performance through their Partner Portal. In this portal, retailers can see their incremental sales, and they can also drill down to a store level or to a location (e.g. city or neighborhood)


Interest Fees

Sunbit charges an interest rate varying from 0%-35.99% from the customers depending on their repayment period. The customers have to pay a minimum down payment at the time of purchase. The remaining amount can be split and paid over a number of months.

It has two options for the customers:

  1. 3 month, 0% APR plan: This is available to all approved customers at participating merchants only. For example, a $300 purchase with 0% APR, repayable over 3 months, would have a down payment of approximately $42 and installments of $86. Actual approval amount, APR, and down payment vary and are based on creditworthiness, state of residence, and merchant location.
  2. 6-12 month plan subject to interest. A $350 purchase with a 29.99% APR, repayable over 12 months, would have a down payment of approximately $70 and monthly installments of approximately $27.

Actual approval amount, APR, and down payment vary and are based on creditworthiness, state of residence, and merchant location.


Sunbit Funding, Valuation, and Revenue

Since the company’s launch in 2016, Sunbit has grown to over 200 employees and has raised $210 Million (making it a unicorn with a valuation of $1.1 billion)

Let’s take a look at Sunbit’s fundraising history:

DateAmount Raised
May 2021$130 Million
September 2020$26 Million
June 2019$26 Million
January 2017$25 Million
September 2016$2.9 Million
January 2016$120,000

Sunbit’s estimated annual revenue is $20.9 million. The company is growing revenues at a 200% year-on-year rate.

The largest and most profitable vertical for Sunbit is auto-repair. 1 in 4 auto repair centers in the United States of America accepts Sunbit as a payment mode.

This is in alignment with their mission of tapping the non-discretionary spending segment. No one likes to shell out $1000 for auto repairs, so Sunbit makes it easier for customers to split their payments over a few months.

Sunbit also enjoys customer loyalty. According to company officials, more than 30% of customers who use Sunbit are likely to use it again in a year.

The pandemic did not affect the company’s performance since the merchants are mainly essential businesses. In fact, despite COVID, the company had some of its strongest months ever in sales during the pandemic.


Conclusion: How Does Sunbit Make Money

By this point, you should be pretty familiar with Sunbit—the buy now, pay later technology company. It’s time for us to wrap up our discussion of Sunbit’s business model.

We hope you enjoyed our breakdown of Sunbit’s business model and that we helped you to understand how Sunbit makes money. We also hope that you gained some knowledge about how buy now, pay later companies work in general. They can be a great option if you are not able to pay for an item in full when you buy it. If this is the case, then make sure to explore your options before making a purchase.

Thanks for reading this post till the end. If you enjoyed it, please share it with your friends and let us know if there’s anything else you want to know about Sunbit or any of the other companies we’ve covered. We’re always happy to help!

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