The buy-now-pay-later firm guided by faith
The founders of a tech start-up that bridges the gap between lenders and merchants tell Candice Krieger why their new payment is so important in the world of finance, and has raised millions from IKEA!
An Israeli tech start-up founded by three yeshiva alumni students has raised millions from IKEA.
In 2021, the Swedish furniture giant invested £16.6 million ($22.5m) for a minority stake in Jifiti, a buy-now-pay-later (BNPL) company. The investment has been made through the investment arm of IKEA’s holding company, Ingka Group, and is the company’s first investment in both a fintech company and an Israeli company.
BNPL refers to any situation in which a consumer can pay for a purchase over time. The industry has exploded in recent years, with companies partnering with merchants to allow customers to spread out their payments – an option welcomed by the increasing number of consumers who turned to online shopping during the pandemic.
“Covid rapidly accelerated technological developments in finance, payments and banking,” notes Yaacov Martin, the CEO and co-founder of Jifiti. “It changed fintech in a tangible way – from online payments through to contactless payments and the dire need for easy-access financial services.”
He notes: “Banks and lenders realise that BNPL is not a trend, but a genuine payment method that is not going anywhere. If they aren’t in the space, then they risk not only losing out on the growing market, but also losing legitimacy as a payment/banking provider. Service providers realise that they need to adapt their solutions to the BNPL use case, including fraud, automation and more.”
The IKEA investment is indicative of the way the market is heading. According to reports by CB Insights, the pandemic’s impact and BNPL’s overall rise in popularity will lead the industry to reach $1 trillion in transaction volume worldwide in 2025. BNPL grew to account for 2.1 percent of all global e-commerce transactions in 2020 (Worldpay’s 2021 Global Payments Report).
Jifiti bridges the gap between lenders and merchants. It enables banks and lenders to offer their existing loan programmes at the point of sale of any retailer, in-store and online. The company recently launched its white-labeled Split Pay solution, which will enable banks to offer split payments directly to merchants, in their own brand.
The company works with other well-known brands, including IKEA and Walmart; and financial institutions such as Mastercard, Citizens Bank in the US, CaixaBank, Credit Agricole and others.
Around £22m ($30m) has been raised to date, including from Schottenstein Stores, Jesselson Family Office, Simon Property Group, Liberty Israel Venture Fund and Ingka Investments (IKEA).
The company was founded by Martin and his fellow yeshiva alumni, Shaul Weisband (CMO), and Meir Dudai (CTO) in 2012.
Martin recalls: “When I got engaged almost 20 years ago, I had an idea to create a new concept for an online gift registry, but put it on hold. About 10 years later, I ran into a childhood friend, Shaul, who pitched the exact idea to me. I ran home to get my business plan, we teamed up with our technologically-gifted friend Meir, and the rest is history.
“From a gift registry business we pivoted into the fintech business we are today by leveraging our infrastructure and point-of-sale technology.” The company has had a long-standing relationship with IKEA, and has been its BNPL facilitator across European markets and is expanding into new markets with it.
“The investment is an important stepping stone in our journey and in IKEA’s venture into financial services. It can definitely expedite and improve IKEA’s ability to offer financial services in its UK stores as well, so watch this space.”
Prior to Jifiti, Martin founded one of Israel’s leading import and distribution companies for consumer goods. US-born, he grew up in Ra’anana and studied in a religious high school in Pardes Hanna before the Hesder Yeshiva in Gush Etzion. Does being religious impact the way the founder does business in any way?
“We’d like to believe that our commitment to a higher authority creates certain fundamental obligations that pertain to the way in which we conduct our business.
“This should first and foremost establish a moral and ethical threshold – one that pertains to the way we treat each other internally, our partners, clients and investors.”
BNPL is not currently regulated, but calls are ramping up for this to change to prevent consumers from getting into swathes of debt and poor credit scores. Would Jifiti welcome this? “I think regulation is inevitable as the untraceable debt that is being accumulated by consumers through various platforms and offers must be keeping the regulator up at night.”
“We feel strongly about responsible lending at Jifiti; it is one of our core values. Since we facilitate point-of-sale financing programmes for banks and lenders, which already operate within regulated frameworks, we remain true to our commitment to affordable and responsible lending. These are the products that we strive to bring to light and make accessible to each and every consumer.”
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