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PayPal’s Embedded Finance Vision: Michelle Gill reveals how cash flow lending is reshaping SMB access to capital

As General Manager of PayPal’s Small Business and Financial Services Group, Michelle Gill is responsible for bringing together the products and services that help small business owners run and grow their business. She is my guest for this episode of the Tearsheet Podcast.

Michelle brings deep financial expertise and experience building platforms and tools that help customers manage their finances to her role on PayPal’s Senior Leadership Team. Michelle was previously Senior Vice President of Intuit’s business money management, payment, and banking service, QuickBooks Money Platform. Prior to Intuit, Michelle successfully integrated and expanded SoFi’s lending business as General Manager and Executive Vice President of Consumer Lending and Capital Markets.

Drawing on her early career experience as a Managing Director and Partner at Goldman Sachs, Michelle also served as SoFi’s Chief Financial Officer before moving into the product leadership role. Before that, Michelle spent a decade leading the U.S. Assets business for global investment firm Sixth Street Partners.

Given her career and experiences, Michelle brings a broad view of fintech innovation. She focuses on user-centered solutions. At PayPal, she leads efforts to help entrepreneurs navigate the complicated web of financial tools they often depend on.

“The preponderance of [small businesses] use greater than 15 tools to run their business,” she shares. “What they got into business for is the passion… and yet they end up spending more time on things that are not what they love.”

Our conversation explores how PayPal is actively trying to reduce that complexity. It does so not by offering more tools, but by making the ones they already use work better together. Gill outlines the strategy behind PayPal’s cash flow-based lending model and how it fits within their open ecosystem, whether it’s digital lending, embedded finance, or leveraging open banking.

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How PayPal for Small Business solutions addresses complexity

For many small business owners, managing finances often means juggling over a dozen platforms. PayPal is stepping into this chaos with the goal of integration.  “It’s not the adoption of the new tool in and of itself that’s the problem. It’s how it feeds back into your broader ecosystem,” says Gill. PayPal’s strategy focuses on streamlining tools through a single integration. It aims to reduce friction and give entrepreneurs more time to focus on their craft.

How PayPal cash flow lending works

PayPal’s approach to cash flow-based lending matches repayments with earnings. It is unlike traditional fixed-schedule lending. “Repayment is predicated on the receipt of those earnings,” says Gill. She describes the flexibility of the PayPal Working Capital product. This flexibility makes the loan more manageable for merchants with fluctuating revenue.

But, until recently, merchants couldn’t access more funds until fully repaid the loan. That’s changing. “We are changing our product to allow for the ability to redraw,” she notes. She signals towards an update that will help entrepreneurs recycle capital more efficiently.

Leveraging Open Banking for better lending models

Previously, PayPal could only lend based on what it processed. But open banking now enables them to assess a holistic view of merchant cash flow. “We now can have visibility into the entire merchant account, both on and off PayPal,” says Gill. This broader perspective supports more accurate underwriting. It offers larger loan sizes without expanding the credit risk.

PayPal is embedding finance into merchant workflows

PayPal isn’t just offering loans—they’re embedding them into the workflows merchants already use. Through the PayPal dashboard, users are notified of pre-approved loan amounts as they manage daily tasks. These are like refunds and chargebacks. “We are planning to add the amount that merchants have been pre-approved for, so they know going in,” Gill shares. PayPal is also collaborating with vertical SaaS providers, as well as with marketplaces, to bring financing directly into partner platforms.

Growing with merchants in the Open PayPal ecosystem

Through its open ecosystem, PayPal aims to grow alongside its customers. “We do things from point of sale to lending to online payments for e-commerce… we’ve tried to grow with our customers as they’ve grown,” says Gill. That includes helping businesses navigate newer challenges, like Generative AI and complex commerce models. “We do that through education, tools, and end-to-end services,” she adds.

The Big Ideas

  1. Small Businesses Face Tool Overload. “The preponderance of them use more than 15 tools to run their business.” This overload creates inefficiencies—PayPal’s integrated platform is intended to reduce that friction.
  2. Cash Flow Lending Matches Business Realities. “Repayment is predicated on the receipt of those earnings.” This model reflects how small businesses operate, especially in unpredictable markets.
  3. Access to Capital Expands with Open Banking. “We now have visibility into the entire merchant account… not only borrow against your PayPal receivables, but also your off-US receivables.” This broader access supports more accurate and inclusive lending.
  4. Embedded Finance Increases Accessibility. “Merchants who use PayPal come into their dashboard generally at least once a week… We let them know they have access to capital.” In-app lending notifications simplify the financing journey.
  5. Loyalty Grows with Product Adoption. “If you borrow once from us, you tend to borrow five or six times.” This repeated usage signals that the lending tools are resonating with merchants.

Read the transcript (for TS Pro subscribers)

A unique perspective on financial services

I’ve always loved serving the customer, as you mentioned, be it at the enterprise level, the consumer level and the small business. When you think about the number of companies that serve enterprises, it’s pretty meaningful. Similarly, the number of companies who serve consumers, it’s also pretty meaningful.

When you look at the number of companies that seek to serve small businesses, it’s actually a smaller number. And the complexion of small business is much more complicated in that they vary dramatically. And so far as the types of businesses that they are, both online and in store, both, you know, they have a pretty global reach and footprint their sophistication level varies all the way down from solopreneur up to small and medium sized small businesses.

It’s a really complex group of businesses to serve with single point solutions. And so what you find is there is a much smaller set of companies that serve them. And so the thing that I’ve loved about the ability to serve them is really getting to know them a lot better, understanding the complex needs that they have.

The preponderance of them use greater than 15 tools to run their business, and yet, the last thing that they have time for is managing that complexity. What they really got into business for is the passion that drives the particular thing that they built or are selling.

They end up spending more of their time on things that are not what they are core to them or what they love, and so our goal is really to reduce that complexity and really try to allow them to have that time back to pursue their passion.

Reducing complexity for small businesses

I think the complexity comes from, as you expand your business, or you think about doing new and different things, you often need to adopt an incremental tool through which to do that.

Whether PayPal offers that directly or through partners, the notion of being able to ingest it in a singular integration and not have to integrate with the new solution make it work with your reporting, having everything sync, right?

It’s not the adoption of the new tool in and unto itself, that’s the problem. It’s how does that feed back into your broader ecosystem, from a small business perspective, and making sure it all ties together.

That’s the place where it would be nice to have a single place to actually undertake many of these tasks, rather than having them distributed through a very broad ecosystem that doesn’t always necessarily work seamlessly together.

The challenge of scaling FinTech solutions

That’s right. As companies develop, they become incredibly specialized in one particular thing. And when I look at what I have loved about the portfolio that we have at PayPal is, we do things from point of sale, which is an in store solution, to lending, to online payments for E commerce.

We allow merchants to transact in over 200 currencies. And so the ability to migrate from geography to geography or online to in store, or complexity of the level of payments and how you’d like to accept payments, we’ve really tried to grow with our customers as they’ve grown.

Balancing growth with simplicity

At Investor Day, we talked about PayPal Open, which was bringing to bear all of our capabilities under one umbrella. One of the things I mentioned at our investor day was, you know, it’s one thing to come out with a brand. It’s another thing to come out with simplicity, and those two things are very different.

You can tell everyone, oh, everything is now housed under one umbrella, but as I described earlier, if that necessitates the merchant to have to actually do incredibly hard and challenging work to do the integration themselves, rather than having it all pre integrated on the back end and having just switches that you’re able to turn on and off as you’d like to actually utilize a particular part of a product.

In one instance, you’re asking the merchant to take on the complexity, and the second, you’re taking on the complexity. And so we’ve spent the last couple of years really taking on that complexity and ensuring that our products actually do work together under a single integration.

We came to market with that. We’ve now rolled that out in 200 countries. And we’re really excited about the ability for merchants around the globe to be able to adopt that single integration, which includes both getting the branded button, being able to accept credit card payments, being able to accept local, different types of payments, methods, locally in each geography, etc.

We’ve really tried to take all of the acquisitions that we undertook and all of the capabilities that we now have, and house them into one thing that makes it much easier for merchants to adopt.

The evolution of small business lending

Obviously, one of the things we’ve been tracking over the past few years, particularly with COVID, is like small business lending really changed dramatically, and has been doing so really over the past decade. And I’m kind of curious where you see the biggest gaps in the current market that PayPal is uniquely positioned to address.

A recent Goldman Sachs study came out and said that more than three quarters of small businesses are concerned about access to capital as they maintain or grow their businesses this year.

What we continue to see is the appetite for the simplicity of the product that we offer, and the way that that manifests itself to us is a very high net promoter score from the merchants who do take out that product. It is incredibly easy to use in that it is entirely a digitally native product.

The PayPal working capital product in particular, aligns incredibly well with the way in which a business earns. One of the concerns as a small business, particularly in a changing environment, and the current macro being amongst that, is, how do I know that predictability of the cash flow that I’m going to have coming in, such that I feel comfortable taking a loan on a fixed repayment schedule?

The reality is that businesses are cyclical, and there is a changing macro, and so you may be deciding to buy inventory to grow, and yet it may take you longer than you initially expected to sell out of that inventory. If that happens to be the case, then you’re on a fixed repayment schedule, as was the case with traditional lending, and now you’re in a situation where you have to repay the loan before you’re getting proceeds from the sale of that inventory.

The thing that we love about PayPal working capital, which our customers love as well, is it is the repayment is predicated on the receipt of those earnings and proceeds. Hence, the merchant can feel very comfortable when they take out a loan that they are not going to be in a situation where they’re forced to repay ahead of the receipt of proceeds.

Now, the downside of that structure, in current form is you could have paid down substantially faster than expected, and actually want to re up that inventory. And in today’s environment, which we are looking to change, we haven’t given you the ability to redraw on that loan ahead of the full repayment.

What ends up happening is, let’s just say that you have a small tail out there that you haven’t repaid. You’re in a position where you can’t redraw, and if you would like to recycle that capital and really put it back into inventory, you have to wait. And so we are changing our product to allow for the ability to redraw such that merchants can have the flexibility as repayments may come in faster than expected, to actually have access to that capital, to continue to double down on the growth of their business.

Product evolution and underwriting

It won’t be a difference in credit, right? Because realistically, it’s the same merchant that one is underwriting and you’re underrating again the ability to repay those proceeds. And so the underwriting box actually remains quite similar.

It’s really more of both a policy change as well as a technology change, a policy change. In the context of today, you cannot re borrow unless and until you’ve repaid. So you cannot have two PayPal working capital loans outstanding at the same time.

In the future, in order to allow this to happen, we would want to be able to have you have two PayPal working capital loans outstanding at the same time, which requires, again, like I said, both a technology change on our side as well as a policy change.

Advancements in underwriting technology

It used to be the case that we relied almost exclusively on PayPal data.

What I mean by that is, if you’re a merchant and you sell whatever your goods are that you sell and you receive X percent of your payments through PayPal, you could only borrow against that portion of your receivables, because that’s what you had visibility into.

Now, with the advent of open banking, we have visibility into the entire merchant account, both the receivables that they receive on PayPal as well as those that they receive off PayPal. And so we’ve recently introduced the ability to not only borrow against your paypal receivables, but also your off us receivables, because we now have the ability to have visibility into your entire business and the receivables, and the ability to collect against both of those.

That has been a very meaningful change. We’ve seen our customers that really have gotten to take advantage of this be very happy with that change.

The other change is, as I mentioned before, by consolidating all of the properties within PayPal, some of the receivables that were coming in at the physical point of sale, you couldn’t re borrow against, or you couldn’t borrow against, and now you have the ability to borrow against those as well.

What we’ve really done, again, with that single integration point is allowed all of that data to flow for both the PayPal receivables and then again, the ability to ingest that third party data and make credit decisions based on the holistic picture.

Embedding financial solutions into business workflows

The way in which we do it today is one way, and then we intend to actually expand on that pretty meaningfully.

The way in which we do it today is merchants who use PayPal come into their dashboard, generally, at least once a week, if not greater than that, and they review their outstanding receivables, whether they’ve had any disputes, refunds, chargebacks, etc.

As part of that, on that dashboard, we actually let them know that they could actually have access to capital. And we see a lot of that through the dashboard, both on the app and on the web.

We are planning to add to that, the amount that merchants have been pre approved for, so that they know going in. Here’s how much you’ve been pre approved for. And again, one of the biggest complaints has been loan size. But now, again, as I mentioned, with the advent of open banking and the ability to lend against a broader swath of receivables, there really should be the capability to achieve the loan size that merchants are looking for. So that’s one way.

Then you mentioned embedded finance. The other thing that we are working on with some of our larger partners is also embedding it into their experience, and making sure that as merchants log on to their experience, which may be something that is more persistent. You know, they also have access through that experience.

Lending is one of those things because of licensing is a little bit harder to white label. However, trying to make sure that it really fits into their experience, we’ve done a couple of tests with some partners where partners were looking for their merchants to upgrade the integration on the partner, and we’ve financed that integration, and really given a discount, actually on the amount charged to the merchant to borrow for that integration.

We’ve really enjoyed working with our partners to help them grow, and using lending as really an ability for them to help create the growth solutions that they want for both their merchants and themselves.

The changing landscape of small business finance

I think that when you look at small business lending, it really, despite the fact that everybody understands the need, I wouldn’t say there’s been a massive expansion of the amount of lending that is being done globally relative to the need in the market.

It is a very wide open space with a much bigger need than there is supply of capital. And I think the really interesting thing is, when we talk to investors who are interested in the asset side of this, there’s a lot of appetite for this asset.

I think people understand that it’s an incredibly interesting asset, particularly because it’s tied to cash flow. Investors really like cash flow based lending. It’s incredibly tangible. And so it feels as though there continues to be a dearth of supply of capital relative to the amount of lenders that are out there.

One of the things that’s been really interesting when we’ve talked to third party investors, is the reason they like someone like us lending relative to a third party is the access to data, a proprietary access to data that we have that allows us to do that lending responsibly, and allows us to do it in a way that doesn’t put merchants into a cycle of debt, that doesn’t actually hurt businesses, but instead helps them grow, is what they really like.

They like being part of that story. They like the history that we’ve had in the business, and they like the incredibly measured growth that we’ve had.

Interestingly, as we look at expanding, we’re not really meaningfully expanding the credit box. We’re expanding in the ways I just talked about, right, bringing in third party data that allows us to better underwrite the customer and be able to underwrite them for larger loans, serving segments of the market that we haven’t served historically, because we haven’t done loan sizes that are lower or higher.

I talked about that a little bit at our investor day. Is really a focus for this year of trying to ensure that we can really grow the base that we can provide capital to.

We are incredibly excited about all of these things, because we do think that businesses have and will continue to have a need for capital to facilitate growth, and the ability to do so at such an early stage in a company’s life is what can be a real difference maker in their ability to compete.

One of the things that we hear from our merchants all the time is, yeah, sure, everyone will lend to me once I’m successful and at large, it’s when I am starting out and I really need the capital. That’s when PayPal was there for me. And I will never forget that.

I think that’s something that really shows true. As I mentioned earlier, the Net Promoter Score and it again, it is much easier for a company like us, with the data that we have and the insights that we have into these small businesses, to be able to be there for them when they are smaller, and then to stay with them as they are growing, because we can uniquely meet their needs, because we understand their cash flow.

Creating a virtuous cycle

[Growth in the product has been almost exclusively organic. We really haven’t done much outside the ecosystem to inform and so we’ve started testing really trying to get to our merchants, not just through internal channels, but also external.

I 100% agree with you. I think what we see is, if you borrow ones from us, you tend to borrow five or six times, which is evidence of the fact that you like the product and that it is working for you.

I think the other thing that we see is, as you are borrowing, we do see meaningful growth in the businesses that do borrow, which is amazing. And then lastly, we also see that the more products you adopt, the greater your persistence and longevity is on the platform.

The things that we get excited about are the notion that the more PayPal receivables that you have, the greater amount that you can borrow. Obviously, the receivables that are off us are quote, unquote riskier to us in terms of the ability to collect against them, etc.

Yes, it 100% creates a virtual cycle of the more merchants do with us, the more like they grow, both for themselves and on us, and we really want to help facilitate that growth. That’s what we’re all about.

The future of small business financial services

So I think you’re one of a handful of people that sort of been at the epicenter of this convergence around serving small businesses. And I’m curious what your perspective is, looking ahead a few years, like, how do you envision the relationship between like, payment processors, banking services and lending platforms evolving for small businesses?

I think that small businesses will continue to face increasing complexity with the advent of agentic tools, agentic commerce, etc.

I think being able to be a place that can help them continue to navigate a changing landscape is really critical, and we do that through education. We do that through new tools. We do that through end to end services, and we try to take on the things that drive the greatest complexity, generally in their financial lives.

Because nobody is excited about doing their finances at the end of the month, but everyone is excited about seeing their bottom line grow. And so how do we take the stressful part of that out, and how do we bring the joyful part of that back and let small business owners spend the time doing the things that they really love doing, which is creating their product, speaking to their customers, growing their businesses in new ways.

And how can we be an agent for growth rather than that point of stress?

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Zip CEO Joe Heck: Expanding financial inclusion through Buy Now, Pay Later innovation

Buy Now Pay Later joe heck

Joe Heck, CEO of Zip, a leading Buy Now, Pay Later (BNPL) company, joins me on the Tearsheet Podcast to discuss the evolution of alternative payment solutions in the US. Heck shares lessons from his 20 years of experience in consumer lending and fintech payment solutions and brings insights from his previous leadership roles at firms like Happy Money and TrueStage.

Heck’s background plays a role in his approach to financial services. Growing up in Flint, Michigan, he understands the challenges of paycheck-to-paycheck living. “There’s a consumer base largely ignored by traditional financial systems,” Heck explains. “FICO doesn’t serve them well, but they have a great ability to pay.”

Zip focuses on providing financial flexibility to these consumers. It offers structured repayment plans that don’t push them into revolving debt. According to Heck, “We win when the consumer wins. If they can’t pay us back, our model doesn’t work either.”

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BNPL’s growth, competition, and distribution partnerships

The BNPL industry is still in its early days in the US. Heck notes that BNPL accounts for only about 2% of total payments and 5% of e-commerce transactions in the US. These numbers are significantly higher in markets like Australia and Europe. “There’s a lot of upside left,” he says.

Zip working to grow both its customer base and engagement. “We’ve added over 400,000 new customers in the first half of our fiscal year and saw a 40% year-over-year increase in the US,” Heck shares. Engagement is also rising, with more frequent and higher transaction amounts.

With more entrants into the BNPL space, competition is increasing and Heck argues that Zip’s focus on the underserved consumer sets it apart. “Our customers often fall outside traditional FICO lending. We provide access and flexibility that other BNPL providers might not.”

To expand its reach, the firm is forming strategic partnerships with companies like Stripe and major retailers, including GameStop. “Our partnership with Stripe allows us to integrate seamlessly into thousands of merchants, making BNPL more accessible,” Heck explains.

He also shared how exclusive retail partnerships are becoming less common as merchants prioritize offering multiple payment options. “Optionality for the consumer is what matters. Retailers want to optimize checkout by giving customers payment methods that work for them,” Heck notes.

The Future of Buy Now, Pay Later & cash flow management

Looking ahead, Heck sees BNPL continuing to evolve with better cash flow management tools. Zip is working on “Pay in Z,” a more flexible model that adjusts repayment terms based on a consumer’s unique financial situation. “We’re striving for personalization at scale,” he says.

Moreover, Heck believes increased familiarity with BNPL will drive further adoption. “Younger generations are hesitant about traditional credit cards. They prefer straightforward payment options that don’t come with complex APR structures.”

The Big Ideas

  • Financial inclusion for underserved consumers – “I think one of the underestimated or maybe misunderstood pieces is these folks really have great ability to pay but they’ve got some lumpiness in the way their income rolls in, and their expenses don’t have quite as much lumpiness. And I think where Zip steps in is we provide access when and where they need it.”
  • Strategic partnerships drive accessibility – “Exclusivity has largely evaporated or eroded across the industry. In the early days, it felt like a little bit of a winner take all mindset, if you will. I think the retailers have started to really pick up on the best way for me to optimize my checkout is to have multiple BNPLs and multiple payment options.”
  • How different BNPL providers are coming together – Other BNPLs don’t really fit our customer base, so having us sit next to some of the bigger BNPLs is really fine with us. I think we both have unique strengths, and I think that provides the best overall checkout lift to our merchant partners.”
  • The role of cash flow management in BNPL’s future – We’ll do a lot better as we move into a pay and see structure which allows us to customize not only the payment structure, but better align with the lumpiness of the consumers paycheck. So I think, the biggest thing for us to do is to continue to better understand the cash flow down.

Read the transcript (TS Pro subscribers)

Joe’s Personal Background and Connection to Zip’s Mission

Yeah, no. Really good question. And I think, you know, probably best, I maybe talk a little bit about my, my own personal background. I think it bleeds into, like, why zip and what, what’s, I think, exciting about the company. You know, I grew up in a really blue collar kind of paycheck to paycheck background, Flint, Michigan, you know, it’s got some grittiness and some underdog mentality to it. And you know, that was really something that’s kind of been part of who I am for a really long time. So when the opportunity came up with Zip and just kind of seeing not only the market position, but probably more importantly, the consumer that we serve, it was really a wonderful match for kind of who I am and what I believe in and and I think there’s no shortage of really strong culture here that supports the mission to really help kind of this underestimated consumer base. So it’s been an exciting journey. I think I’m Gosh, eight months now. So feel like I can talk reasonably fluently at this point.

Zip’s Target Customer: The Underestimated Consumer Base

Yeah, if you think about kind of the average everyday American, you know, there, we estimate there’s over 100 million in this kind of underestimated population, where FICO and traditional financial system really doesn’t serve this customer base Well, and that’s a customer that we have continued to kind of help in this paycheck to paycheck World. I think one of the probably underestimated or maybe misunderstood pieces is these folks really have great ability to pay they’ve got some lumpiness in the way their income rolls in, and their expenses don’t have quite as much lumpiness. And I think where zip steps in is we provide access when and where they need it really helping them with kind of everyday needs, and it’s created a really unique relationship that that in a unique position for our brand in the market.

Growth Metrics and Market Opportunity in the US

Yeah, yeah, we’ve had great growth, lucky to be a part of a really wonderful global team as well. We grew in the US over 40% year over year, and that really was on a couple different fronts. One is we grew our customer base significantly, over 400,000 new customers in the first half of our fiscal year and but we also grew engagement with our existing customers. You think about kind of average transaction, but also frequency. We’re seeing a lot strong uptick in both categories for us, I think that engagement is really been a big part of it in building trust with our consumer base. But I think also, like this, probably underpins the larger macro story here in the US. US is early days in BNPL adoption rates, I think we’re at roughly 2% of payments and only 5% of E com. You contrast that with where Australia is at, which is feels like a little bit of the the home of BNPL, and where Europe is, you know, they’re at 15 to 20% respectively. And it just tells you there’s. There’s a lot of upside still left in the US, and it’s an area that we think we’re super well positioned for.

Product Development Strategy and Customer Engagement

So from a new product perspective, we we really try to build products and services that meet the customer where they’re at, wherever that is on their financial journey, and our ability to meet them for everyday expenses around our pay and for product continues to be the core. How will expand that? We we have a pay and eight capability that allows us to handle a little bit larger transaction sizes for our customer base. But really what we believe in at our core is meeting that customer with flexibility. And flexibility can show up in a lot of different ways. It can be really strong approval rates with customers that largely are left out by the traditional FICO system. But it also, I think, is going where the product is going for us, which is what we call pay and Z. Pay and Z will allow us to match the customer a little bit more specifically. I think of it as personalization at scale. If a customer wants to pay a certain dollar amount, we can flex the term to match that payment date. And there’s a lot of additional opportunity there. I think the the other way that we engage the customer is we continue to try to make zip accessible wherever it is that they’re at so our that that’s has to do with our Merchant growth strategy, our in store experience, and largely you can start to see where we’re headed with partnerships like GameStop, partnerships like stripe from a distribution standpoint. So I think we’re just scratching the surface on our growth story, but 40% year over year, feels really good.

Value Alignment: How Zip Differentiates from Traditional Financial Products

Yeah, yeah, I would say maybe, maybe take it a half a step back, and I’ll probably get on a soapbox a little bit. But when I look at like the traditional financial system, think of credit cards like the incentive alignment for the consumer is not strong. You know, the banks win when the customer loses, it’s in it’s a complex product. You know, most the average Americans don’t want to understand how an APR works and how revolving balances work. I look at where we’re at and, you know, we have bnpls, have a really strong incentive alignment with the consumer. And, you know, we win when the consumer wins, you know, and we lose when the consumer loses. If they can’t pay us back, we don’t. Our model doesn’t work either. So I think that incentive alignment is kind of core to why we’re seeing stronger and stronger product adoption. I think the other thing is, is the simplicity of the product is really built on trust with the consumer, and I think that simplicity has created an easier understanding of the product and the payment terms, and consumers, I think, are really picking up on that. And I think the combination of the two is like, basically, look, we’re not we’re not built in a way that a consumer can drive onto that like endless debt treadmill where they can’t get off.

You know, these are transactions that pay off over the course of six weeks, and if they pay us back, right, if they don’t, then their access to credit is dropped. But I think the the incentive alignment has in simplicity, has created this bond of trust that allows us to really differentiate specifically with this underestimated consumer. You know, I think that the average financial system, products in services try to flex into, eventually, kind of pushing these folks into an APR product where we’re just trying to help them in that paycheck to paycheck bridge the way that plays out for the consumer. I think I’ve talked quite a bit about but the way that plays out for the merchant is equally important. Most of these folks, like you think about a Black Friday deal, for example. If that happens to be in between the paycheck to paycheck, a lot of this consumer base misses the moment. We allow the retailer to catch that moment with these consumers, a percentage of our customer base would it would have had to abandon their cart in those situations and wait for their paycheck to come in. So I think like that incremental lift is something very unique to zip within our. Our merchant partnerships.

Distribution Channels and Strategic Partnerships

Yeah, yeah. Let me, let me break up the two questions, both are really, really important to how the markets moving around. One is like, I think exclusivity is largely evaporated or eroded across the industry. I think you look at kind of the early days, it felt like a little bit of a winner take all mindset, if you will. I think the retailers have started to really pick up on the best way for me to optimize my checkout is to have multiple bnpls, multiple payment options, meet the consumers with the payment option that best fits them. I think this is where zip really excels. You know, are the other payment options, other bnpls don’t really fit our customer base, so having us sit next to some of the bigger bnpls is really fine with us. I think we both have unique strengths, and I think that provides the best overall checkout lift to our our Merchant partners. So I would say from an exclusivity standpoint, it makes sense here and there, but for the most part, we believe, like optionality for the consumer is the best thing. I think that bleeds into this distribution conversation as well. I think, look, every company, I’m sure, every company you’ve interviewed, talks about their their resource constraints, and you know, everybody wants to drive integration. I think the way we look at some of these distribution partnerships is simplicity for our retail partners. Stripe has connectivity with 1000s upon 1000s of merchants, and really kind of taking a one to many approach with partners that like stripe from a B to B to B standpoint is really important for our scalability. I think you’ve seen some of our or the other bnpls Really push on those partnerships were in kind of our early days of optimizing those as well. And so when, again, kind of coming back to our growth story, I think we’ve done really, really well, but there’s a ton of room left with with the execution around our go to market.

Meeting Consumers Where They Are: Key Retail Focus Areas

Yeah, yeah, for zip in particular, going back to this underestimated consumer, really, it’s about meeting them where they’re at and where they’re at, usually, is like bridging day to day needs, and that can include things like groceries, Bill Pay, and I think the traditional way to think about, or the traditional way finances thought about, this is through a kind of a pretty high judgment point of view. Is like, oh my gosh, you’re using credit for groceries. Well, you look at what I don’t know. I use my Amex card for groceries. The 30 day float gives me a lot of optionality to figure out where and what I want to use cash on and vice versa. I think that’s what we’re seeing. A lot of the BNPL usage around as well, is that float is creating a lot of flexibility for this paycheck to paycheck consumer, to manage their money in the way they want and and I think really it’s the way they want. I wanted to emphasize the I think traditionally you think of even budgeting, it’s like, hey, strip out coffee from your your budget. Well, if budget, if coffee is where you really find you know, a respite in your life. Cutting out coffee is an unsustainable budgetary cut, and I think what we want to strive for is continuing to meet this consumer, wherever they’re at in their financial journey, provide access to easy, simple, flexible credit in a way that doesn’t get them trapped on a debt treadmill. And I think that simplicity kind of shows up in the way the product works.

The Evolution of BNPL Adoption in the United States

Yeah, it’s an interesting question. I don’t think any of us know exactly where. I think you look at our customer base, you know, largely in between. Call it, you know, 25 and 34 so we’re not talking, you know, the super young crowd, and we’re not talking about, you know, the older crowd either yet. But I think what we’re seeing is familiarity and understanding of the product really emerge over these last couple of years. So when I think about, you know, this group of of consumers, call it 100 plus million that are really frustrated with the financial system as it sits today, the judgment that it’s associated with it, you know, you make a mistake and FICO will haunt you for seven years, like you’re starting to see that show up, not only in our customer base, but in the younger crowd coming up into the system. There’s a fear of the like a credit card and how I can get potentially trapped. So when I think about this kind of broader trend of wanting to be out of debt, stay out of debt, BNPL offers a lot of the flexibility without without the complexity. And so I think we’ll continue to see an emergence, kind of, across the all segments as kind of the stigma has eroded around what BNPL is and how it’s used. And I think you can see that in a lot of the recent studies that have been released around just like how people are using BNPL, the payback behavior in particular, you know, the the average loan for us, you know, we get 98% plus payback. If you contrasted that with a similar like for like at a credit card, you’re, you’re only in the 90s. So that, that simplicity and trust that’s being built, I think, I think, is kind of the bridge from that, you know, pretty high delinquency rate to to where zip performs.

Regulatory Preparation and Compliance Approach

Yeah, well, you know, it’s, it’s, you know, there’s lots of patterns in the world, right? I think if you look at the way buy now, pay later, kind of grew up in Australia in particular, zip has always been at the forefront of kind of regulatory fit for purpose, for the consumer. We’ve always been consumer centric, which means, like, we want to take a mindset of anticipating what regulation could or should look like, and I think we’ve we’ve done that here in the US as well. I think always keeping the consumers best interests at heart allows you to really structure your product and your services in a highly compliant way. We here in the US use a bank partnership and have for quite some time, web banks a terrific partner for us, and I think that puts us on a pretty clean regulatory positioning.

Future Vision: Addressing Cash Flow Challenges for Consumers

Yeah, yeah, yeah. Look, I think the world of FinTech, and again, this will be a little soap boxy, but I think the world of FinTech largely has been taking offline products and putting them online like that was, that was early days. You know, it felt transformational, I think for a lot of us in those early days. But I think as we evolve, it’s now more trying to think through like, what those consumer experiences are really going to look like, what the merchants are going to need. And I think the the large part, for me is, I think we’re going to continue to just double down on our consumer base. It’s, it’s an underestimated population that I think is largely ignored and or judged pretty quickly from, like the FICO system.

So what I mean by that is, like, I always kind of tell the story of, you know, this paycheck to paycheck consumer largely lives in the moment. They’re probably better with where every dollar is going than any of us are. And I think trying to meet them and understand their cash flow needs and the lumpiness is really where zip I think, plays a role, and we’re doing that already with with our buy now, pay later, product. I think we’ll do a lot better as we move into a pay and see structure which allows us to customize not only the payment structure, but better aligned with the lumpiness of the consumers paycheck. So I think, I think the biggest thing for us to do is to continue to better understand the cash flow down. Dynamics of the consumer. I think that one makes our underwriting stronger, but I think it better positions us where the consumers aren’t paying late fees, they’re not paying pay or payment date change fees. They’re really just focused on us meeting them in the moment with the right product that puts them in the best chance to be successful and and to so to me, that cash flow data is is an area where I think we’ll continue to invest in in invest in our consumer.

Providing Visibility into Financial Lumpiness

Yeah, that’s a good, good clarification, yeah, so when you think about the lumpiness and living kind of in the moment, like you don’t really anticipate things, right? So like, think about getting a flat tire. You get a flat tire, your immediate decision is like, do I deploy cash on that flat tire to repair it, or do I because I got groceries this week, like, but I’m not thinking about the fact that I probably have a $200 heat bill in two months, or in two weeks. I probably have rent due in three weeks. And really trying to better match, like, the optimization of how I’m leveraging my cash, how I’m leveraging credit. Really, that’s where I think we can play a stronger role. Is like, meet the consumer in that moment of distress, potentially distress or opportunity both. Both are great and provide them with the option set to maximize the moment and and I think that’s really a different path of how traditional finances continue to work. I think, I think, you know, I grew up in traditional finance, you know, they it’s always a retrospect. I want to, I want to provide some of that foresight and allow people to optimize in in, you know, this is probably back to my, my earlier days, but we know via some academically rigorous studies that you can reduce stress in somebody’s life if you can help them really anticipate and manage those both expected and unexpected. So when I think of the future vision for ZIP, it’s really helping bring down kind of the stress anxiety and judgment that’s associated with traditional finance and, you know, provide the right access at the right moment.

Finding Balance: Professional Ambitions and Personal Goals

.I would say I shifted this year to starting to read a lot more. Just, I’ve got, I got two young kids, so, like, a lot of this is just like, how do you stay sane and find time for professional I think we’re where I look at my big, hairy, audacious goal is really around what I perceive as the opportunity for zip. I talked to the company about this all the time, like there’s a moment here where we’ve got an opportunity to really make an impact. And I think the biggest you look at this consumer base of call it, you know, 100 plus million. You know, we’ve served just over 4 million of that today. So for us to have really significant growth opportunity here in the US means mostly that we need to stay focused and we need to execute. And it’s not the sexiest of goals.

When I think about and I don’t want to, I don’t want to signal too strong to to any investors, but when I think about the potential of this company, I just haven’t seen too many opportunities where the macro is there, the business, the culture of the company, are all lined up in the right way and in really, it just depends on on focus and, and I think that’s, that’s where my head’s at, professionally, personally, you know, balancing that giant opportunity with being, you know, good dad and good husband are that that’s probably the hairy part of it.