Kabbage powers Alibaba’s Pay Later programme


Daniel Webber
Daniel Webber
Founder & CEO
Daniel is Founder and CEO of FXcompared and has 18 years of experience in the international finance world focusing on cross-border payments, technology and the property sectors. Daniel is widely… Read more
  • The B2B programme is an opportunity for SMEs to grow their businesses, according to Alibaba
  • Pay Later is powered by small business funding company Kabbage and is currently available in North America
  • Rumours have been going around in the business world that Alibaba will be expanding Pay Later’s reach later on

Kabbage is now helping out small to medium sized enterprises by powering Alibaba’s Pay Later programme. According to the paytech, Pay Later makes it possible for customers to get as much as $150,000 in financing to pay for their orders. This is particularly useful for small businesses, Kabbage says as it will improve cash flow.

A Fintech Futures report also notes that the programme will make doing business more accessible. While the financing solution is only available in North America at the moment, Alibaba is rumoured to have plans to make the programme available in developing nations where it is needed most.

The World Bank notes that small businesses in developing nations often use a portion of their household budget to get inventory for their stores. In the case of remittance recipients, migrant workers transfer money internationally to fund said businesses as this is their way of investing the money they have earned abroad. The organisation adds, however, that remittances usually go to basic needs such as food, shelter, and utilities, but records show that once said needs are fulfilled, additional money sent to remittance recipients is used to put up businesses. Overseas transfer rates take a small portion of the remittance, based on UN data, and can negatively affect the purchasing power of recipients.

For many small businesses in both developing and developed nations, remittance services are also used to pay suppliers and receive payments from customers.

“Financing at the point of sale requires a fully automated solution that can handle the immense volume of daily transactions that occur on Alibaba.com”, says Kabbage CEO Rob Frohwein.

Kabbage is known for its small business funding options wherein customers can get a line of credit and only take the funds that they need. Processing a credit line through the company only takes 6 to 10 minutes, according to their website.

The partnership between Kabbage and Alibaba is a welcome development for many small businesses in the United States. With the economic slowdown in the US, the Pay Later programme is a good alternative for those who need a bit of help with paying their suppliers, experts say.

“We recognised an opportunity to give our customers a convenient financing solution that allows them to improve their cash flow at competitive rates, so they can have the cash they need to grow their businesses”, adds the head of Alibaba B2B in North America John Caplan during an interview with Fintech Futures.

Businesses interested in the programme can connect their verified business bank account to Pay Later. Alibaba says that once Pay Later is used by a business, the system will create a loan record with rates as low as 1.25% per month. Alibaba adds that there are no extra fees for the said transaction.

Pay Later was launched in June 2018. Based on Kabbage’s data, a whopping 68% of businesses that made use of the programme were able to increase their order sizes.

Find out more about the newest development in the paytech industry here.  

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