West Los Angeles-based Snap Credit Inc., an ecommerce payment platform doing business as Credit Key, has raised $33.9 million in Series A capital.

Greycroft, which is dual-headquartered in downtown and New York; Santa Monica-based Bonfire Ventures Management; and New York-based Loeb.nyc invested in the funding round, with additional participation from undisclosed investors.

Credit Key offers a point-of-sale financing service for businesses, allowing customers to take out on-the-spot loans to pay for products upon checkout. The model, sometimes called “buy now, pay later,” has gained traction in recent years and propelled companies such as San Francisco-based Affirm Inc. to multibillion-dollar valuations.

“(Business to business) ecommerce continues to expand at an incredible pace, but a great majority of merchants still lack the payment tools that their customers are asking for,” Credit Key co-founder and Chief Executive John Tomich said in a statement.

“As we equip more and more merchants with our point-of-sale financing option, we continue to see data that points to larger orders, fewer abandoned carts and improved customer acquisition,” he added.

Credit Key does not replace other point-of-sale payment methods, but acts as an additional option for customers on checkout. The company says its offering comes at “no risk to the merchant” because Credit Key assumes both the credit risk and any loan servicing required.

The buy-now-pay-later model has grown in popularity in recent years, particularly among Millennial and Gen Z consumers wary of taking on credit card debt. Adoption of the model has accelerated during the Covid-19 pandemic as retailers search for ways to entice cash-strapped consumers to buy more in a world increasingly dominated by ecommerce.

Credit Key and its investors appear to be betting that these trends will carry through to the world of business-to-business commerce.

According to the company, more than $9 trillion business to business payments are processed in the U.S. each year. Half of this comes from small to medium sized enterprises, according to Credit Key — the exact type of companies the lender targets for its payments product. Only a fraction of that total — about $1.3 trillion — comes in the form of online transactions, but Credit Key says this proportion is increasing rapidly and will likely reach $1.8 trillion within the next two years.

“As small and medium-sized businesses increase online purchasing, they’re eager to find alternatives to the limits of both traditional trade credit and the common credit card,” Tomich said. “We anticipate continued momentum, and we’re excited to assist small businesses as they work through the recovery and position themselves for the future.”

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