Zopa enters the BNPL space with a suite of regulated products

By Joy Dumasia

Zopa has entered the BNPL space with a suite of fully regulated products that prioritise transparency and customer protection. Setting its sights on the UK’s £6 billion BNPL market, Zopa brings a simple and fair option for larger purchases (£250 – £30,000) that may take customers months or years to save up for. 

The new offering combines the technology and innovation that enables instant decisions and fast consumer journeys of a FinTech, alongside the consumer protection, credit checks and safeguards of a regulated bank. 

Zopa bank will:

• Offer affordable credit by running credit checks and affordability tests for all customers.  
• Share data with credit rating agencies (CRAs) to give other lenders a full picture of people’s debt positions.
• Help customers better consolidate, structure and pay down their debt using its proprietary tools.
• Enable users to build their credit profiles and improve their financial positions. 

First announced at Money2020 Europe, Zopa bank will roll out its BNPL offering using a staggered approach that carefully and closely aligns with the Treasury’s ongoing consultation in the UK. Zopa’s first product will offer BNPL retail finance for merchants; it will be deployed through B2BC partnerships. In a second phase, Zopa will broaden its BNPL toolkit with a consumer offering once new regulation comes into place.

Tim Waterman, Chief Commercial Officer at Zopa, said: “Against a backdrop of global financial uncertainty, Zopa is entering the buy-now-pay-later space to make instant, yet responsible lending decisions with products that are sustainable and fit for purpose.

Zopa is ushering in the era of BNPL 2.0, a regulated evolution of BNPL. We combine the seamless customer journeys and best-in-class digital UX offered by traditional BNPL players alongside the ability to underwrite longer, larger loans in a way that fully meets regulatory requirements.”

To date, Zopa raised $500 million from the early investors of Slack, Uber, and Alibaba to build the UK’s best bank for saving and borrowing. Zopa hit profitability in March, just 21 months after acquiring its banking licence. Last year it appointed Monzo’s Graham Robinson as its Chief Risk Officer and Helen Beurier as its first Chief People Officer (ex M&S, PepsiCo).

Since getting its banking license Zopa has attracted £1.2 billion in deposits, more than £1.5 billion of loans on its balance sheet, issued 300,000 credit cards, becoming a top 5 credit card issuer in the UK, and tripled (3x) revenue per customer. In May, Zopa matched the best and boldest benefits of the UK’s largest employers and enabled employees to work from abroad for up to 120 days a year.