Deal Radar 2008: Bill Me Later – Blessed by Amazon

Bill Me Later is a safe and convenient payment system that allows people to purchase on the phone or over the web. The service is in direct competition with eBay’s PayPal.

It was recently judged as the sixth-fastest-growing U.S. firm by Inc. magazine. It has around 200 employees and is based in Baltimore.

Bill Me Later has raised a total of $200 million from Azure Capital Partners, Chase Paymentech, Crosspoint Venture Partners, First Data Corp., and others. It has also secured a $640 million debt financing from Citigroup.

The payment system is used by over 700 sites including ToysRus.com, Walmart.com, Apple Store, etc. 56 of the Top 200 online retailers offer Bill Me Later (Source: Cowen and Trout).

The payment costs merchants 40% less than credit card transactions, helps them attract customers who would otherwise not shop online and improves customer loyalty.

Around 3 million people have signed up for Bill Me Later’s services. Majority of the customers, interestingly, are middle-aged women.

The Company expects to earn $100 million in revenues this year.

Amazon has decided to back Bill Me Later by investing an undisclosed amount in it and has decided to offer the payment option on its site. Amazon could acquire the company in a later date to strengthen its alternative payment solution Amazon Payments.

Google could also see this as an opportunity to strengthen their payment system, Google Checkout, aggravating its already contentious relationship with eBay. eBay is Google’s #1 advertiser.

Financial services companies like Citigroup, JP Morgan Chase, Mastercard, etc. could also look at acquiring Bill Me Later to gain foothold in the e-commerce market.

For a long time, Paypal has ruled this territory as the undisputed king of the hill. We will watch Bill Me Later as the challenger to Paypal’s hegemony.

This segment is a part in the series : Deal Radar 2008