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Business Operations Business Models

How Does Splitit Make Money (Business and Revenue Model)

The Splitit business model

How Does Splitit Make Money?
Here’s what you should know:
  • What is Splitit, and how does Splitit work?
  • How does Splitit make money?
  • Merchant Fees (Commission Fees)
  • Transaction Revenue
  • Splitit’s profit and revenue
  • What is the Splitit business and revenue model?
  • Splitit’s funding and market cap

How does Splitit make money if they offer interest free loans and no late fees? Here is a full, in-depth, breakdown of their two (2) revenue streams and the different products and services they offer, as well as the Splitit business model, their profit and revenue, and how Splitit works.

What is Splitit, and how does Splitit work?

Splitit is a financial company that offers “buy now, pay later” services with interest free loans and no late fees to customers.

Founded in 2012 by Gil Don and Alon Feit, Splitit began trading on the Australian Securities Exchange (ASX) on January 29, 2019, under the ticker symbol “SPT”.

Now, Splitit has over 566,000 active shoppers and more than 2,800 active merchants using the “buy now, pay later” service.

How Splitit works is: Once a shopper signs up for a Splitit account, they can then buy from over 2,800 partnering merchants with the “buy now, pay later” checkout option. From which, shoppers can choose to pay back Splitit in 3, 4, 6, or up to 24 installments.

Some of Splitit’s competitors include Klarna, Afterpay, Affirm, Sezzle, Quadpay, and other “buy now, pay later” services.

How Does Splitit Work | Splitit Business Model | How Does Splitit Make Money?
Source: Splitit

How does Splitit make money?

According to page 3 of Splitit’s Q2 FY21 Report, the company has more than 566,000 total shoppers and over 2,800 active merchants on the platform. As well as transacting $246 million in Merchant Sales Volume (MSV) in 2020.

So how does Splitit make money off of all those active shoppers, merchants, and merchant sales volume?

Below is a breakdown of how much money Splitit makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 2 ways of how Splitit makes money (in 2021):

Splitit has a revenue model that makes money in two (2) ways – merchant fees and transaction revenue.

#1. Merchant Fees (Commission Fees)

Splitit makes the majority of its money from charging Merchant Fees. In fact, $47.56 million or 76.8% of Splitit’s total revenue came from Merchant Fees in 2020.

As noted above, Splitit facilitated over $246 million worth of sales for more than 2,800 active merchants using their “buy now, pay later” service globally in 2020. Of which, they receive a commission on each transaction.

Splitit Merchant Fees:

  • starting at 1.5% to 3% per installment (depending on the Merchant Plan chosen)
Splitit Fees | Splitit Business Model | How Does Splitit Make Money?
Source: Splitit

Note: 76.8% of Splitit’s total revenue came from merchant fees in 2020.

#2. Transaction Revenue

In addition to merchant fees, another fee Splitit makes money from is through transaction fees. Which, in 2020, resulted in $1.5 million in revenue for Splitit.

The way Splitit makes money from this is by collecting a $1 to $1.50 transaction fee from merchants every time a new installment plan is originated between a shopper and Splitit.

How much Splitit takes from merchants depends on which plan merchants choose. The company offers two (2) types of plans for its merchants: Standard and Funded. The Standard plan has Splitit pay merchants when shoppers pay their monthly installments, while the Funded plan has Splitit pay merchants the full amount of the purchase upfront.

Splitit Transaction Fees:

  • starting at $1 to $1.50 per installment (depending on the Merchant Plan chosen)
Splitit Fees | Splitit Business Model | How Does Splitit Make Money?
Source: Splitit

Note: At this time, Splitit makes 100% of its money from its merchants and 0% from its shoppers. (such as late fees or interest fees – as other similar “buy now, pay later” service companies may charge its shoppers).

Splitit’s profit and revenue

In 2020, Splitit reported net revenues of $6.74 million.

Note: Because the Splitit Ltd is a publicly traded company on the Australian Securities Exchange (ASX), they must file continuous financial filings with the Australian Securities and Investments Commission (ASIC). You can find all of Splitit’s publicly released financial reports, including annual reports, through Splitit’s investor section on their website.

What is the Splitit business and revenue model?

Splitit makes money through a few revenue models that they combine within their company, they are:

  • Commission based business model
  • Fee-for-service (FFS) business model

Splitit’s funding and market cap

According to Splitit’s Crunchbase profile, Splitit has raised $264.6 million over 6 rounds and has a market cap of $191.19 million as of October 2021.