Meidad Sharon, CEO and founder of award-winning retail finance SaaS network platform ChargeAfter recently sat down with the GetLatka team to discuss his company’s role in the growing Buy Now Pay Later (BNPL) space. Although Sharon remained tight-lipped about the platform’s numbers, citing its position as a private company, the 15-year veteran of the global payment space did open up to Latka. Sharon shared his vision for the future of BNPL, how many zeros ChargeAfter currently has in terms of merchants, lenders, and customers, and why he so highly values his financial industry investor partners.
- Launched in 2017 with $1.5m Seed Round
- Team of 120 in Israel and US. Large engineering team in Israel
- Raised $44m Series B round in March 2022
5 years ago, first to market solution
At launch in 2017, ChargeAfter became the first global network to provide merchants with a complete POS financing solution from multiple lenders. Sharon leveraged his customer-first approach by filling a need in the market. “Each lender focuses on a different segment, so only 30% of consumers get approved. 70% are declined. Consumers want to be approved and pick the lending solution that best fits their needs. Merchants want to offer flexibility and the best coverage for all consumer buyers,” Sharon explains. As a platform, ChargeAfter connects multiple lenders offering different products to different segments to improve customer experience and give merchants a solution that can approve most applicants.
BNPL Grows as New Form of Credit
Splitting purchases into multiple payments at point-of-sale is a hot market for lenders like Affirm, a leader in the BNPL space. ChargeAfter works with Affirm and many other lenders to offer solutions that merchants can white label. Sharon explains that typical BNPL terms offer 4-6 payments, but some consumers will opt for terms up to 3 years.
Limitations of Affirm
Founder Sharon noted that Affirm is a great lender, but they only offer a specific product for a specific credit box, and only in the United States. “They don’t lend to consumers in any other country or do sub-prime,” Sharon added. ChargeAfter fills this need by offering lenders the opportunity to join the platform to give consumers choices. “Each lender is focused on a specific lending product. Pay in 4, long-term installments, revolving line of credit, and even leasing. Each focuses on a different credit segment, like prime, near-prime, and subprime. Lenders can even have specific geographies,” noted Sharon.
40 Lenders to 2X to 80 in 2022
The CEO reiterated that the ChargeAfter platform enables consumers to have multiple options when purchasing at point-of-sale. He confirmed that the platform currently has 40 different lender partners on the platform and expects that number to grow to 80 by the end of the year.
1000s of Merchants
While Sharon declined to be more specific, he admitted that ChargeAfter currently serves “thousands” of merchants. He cited Lenovo as one such merchant, where ChargeAfter provides the services that run Lenovo Financing. CEO Sharon added that ChargeAfter enjoys wide distribution in multiple business verticals after starting with an electronics merchant back in 2017.
Millions of Consumers
Sharon again kept details close to the vest, instead only saying that ChargeAfter serves millions of consumers who are looking for BNPL terms that suit their specific needs. After discussing the fee structure with Sharon in broad strokes, it became clear that the business model would need a significant volume of transactions to drive profitability for the platform.
GMV Run Rate of Hundreds of Millions
Founder Sharon admitted that the current GMV run rate (last month’s run rate x 12) was in the hundreds of millions. However, he declined to be any more specific.
ChargeAfter earns a portion of the 1.8-3% transaction fees
After much banter about margins and models, Sharon finally conceded that ChargeAfter is paid similar to the VISA and MasterCard model. He noted that merchants pay 1.8-3% on credit card transactions, and those fees are shared by the issuing network, the distributor, and the gateway. The model works similarly for lending products, was all he would reveal.
Building the VISA of BNPL
Sharon summarized his vision by stating, “we are building the VISA of BPNL by connecting lenders and merchants.” When pressed on his fee structure, he reiterated that it’s a blended model between a flat fee and percent of GMV.
Raised $44m Series B due to market demand
CEO Sharon discussed ChargeAfter’s recent Series B funding round as necessary to add merchants, distributors, payment players, and lenders. He noted that the recent round included support from Citibank and Banco Bradesco. “They’re all coming to us for technology and connectivity,” he commented, adding that, “we need capital to accelerate growth.”
$1.5m Seed in 2017
Pico Venture Partners supported the Israeli-based ChargeAfter with $1.5m in 2017. Although he wouldn’t discuss the details of the early round, Sharon confirmed that the seed terms were consistent with the US standard of $1.5m on a $5-10m cap convertible note deal.
$8.5m Series A in 2019 from strategic banking partners
Sharon proudly shared that since 2019, ChargeAfter has added several strategic investors, including Synchrony Financial, a leading BNPL bank, Propel Venture Partners, and Plug and Play Tech Center. VISA invested in between rounds. “We think when you’re building a tech solution and ecosystem that serves an industry, you want banks investing to help build a better ecosystem and base,” shared Sharon.
Third Wave of Credit
CEO Sharon sees Buy Now Pay Later as the “third wave of credit,” noting that credit cards dominated the credit market, but now “POS as the point of need is the future of credit,” he said. Sharon added that ChargeAfter is doing the connecting and is creating the connectivity. “We are adding more lenders and merchants and are connecting to all payment players. We are enabling their BNPL products,” he espoused.
Famous Five
ChargeAfter CEO and Founder Meidad Sharon chose Grow to Defend as his favorite book. He follows many CEOs. Salesforce is his favorite tool. Meidad sleeps a short 4-5 hours per night. He is 50 and is happily married with three daughters. When he was 20, Meidad wished that he had known that Fintech would be such a big thing and that he would be at the center of the buy now pay later world.
