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Business model shows how Bill Me Later works with a Utah-chartered bank to extend credit to online purchasers.
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A buyer, say in California, wants to
purchase a computer for about $1,000 from an online seller such as eBay.
Through Bill Me Later, the buyer
applies for a loan that is to be funded by a Utah-chartered bank.
Bill Me Later uses its software to
analyze the buyer's credit worthiness and the Utah bank extends the loan.
The online merchant, paid
by the bank, ships the computer to the buyer.
Acting according to their contract,
within two days Bill Me Later buys the receivables associated with the loan from the bank, which is paid a small fee for its services.
Bill Me Later also contracts to service
the loan, and receives payments and assesses interest and fees.
Bill Me Later collects payments
from the buyer. If he or she fails to pay on time, the company assesses interest of about 20 percent and a monthly fee of up to $40.
The lawsuit alleges that Bill Me
Later is the real lender in this case and is merely “renting” the Utah bank’s charter in order to be able to charge higher interest and fees. Bill Me Later and WebBank, a Utah bank that now provides the loans through the Bill Me Later network, defend the program as lawful under Utah and federal law.
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Source:s: Tribune research Reporting by Tom Harvey, graphic by Todd Adams | The Salt Lake Tribune
... But then the process takes some different twists
How Bill Me Later worksBill Me Later is an eBay Inc.-owned company that contracts with a Utah bank to provide credit to consumers for purchases via the Internet as an alternative to credit cards. A lawsuit in federal court in Utah is challenging the interest rates and fees that are assessed. Here’s how the service works:
