Launch HN: Pier (YC W23) – Stripe for Credit
There’s no ‘try it out’ link, primarily because (as most fintech devs know) there are compliance and regulatory thresholds that make it hard for us to give out sandbox keys freely. However, we’ve put together this video to show you the basics of how Pier works: https://www.loom.com/share/04883eb17f394b46a67cce919cb77356.
Alex & I worked together at our last company, a credit tech startup, where we saw how businesses struggle to launch credit products quickly & compliantly, due to fragmented solutions and high compliance hurdles. We’ve talked to many companies looking to launch their own product, and are taking our learnings from before to build a modular, flexible credit stack.
Credit is highly complex and requires a dedicated team -—and few people specialize in this. Unlike social apps where you can launch with a 70% product and iterate over time, credit is heavily regulated and needs to be done 100% right from the beginning. When you factor this in with federal and state regulations across 50 states, the tech stack and compliance hurdles become too time-consuming and expensive for companies to build in-house, especially for fast-moving teams trying to build innovative products. We’re talking 9-12 months of buildout and millions of dollars. This is what most companies struggle with and it’s why we’re valuable to them.
Our credit infrastructure gives developers the freedom of not having to worry about the details of managing a credit program. Using Pier, they can offer credit to their users without ever directing them outside their app. Our API powers it all under the hood (see API docs: https://pier-dev.readme.io)
For example, a business (say "ACME") has a user who comes to their platform & applies for a loan. That user stays on ACME’s platform and is never redirected to a 3rd party. ACME owns the entire UX from presenting loan offer, to signing loan docs, to disbursing funds, sending statements and collecting payments. What ACME doesn’t have to deal with is any of the back end. Each part of this flow is powered by Pier API.
We support the full credit lifecycle from loan origination to loan servicing. Want to generate a loan doc for a specific credit offer & user? We've an endpoint that creates a pdf to present to the user, and ensures it doesn’t violate any laws for the state the user is in. Want to retrieve loan balance, generate loan statement or process loan payment? We've API endpoints for that too.
There're existing products that solve parts of the credit stack, such as KYC & underwriting, but nothing that solves the credit stack end-to-end. Credit is different from payments and banking-—those are 1x activities, while loan terms are for 12 months or more. We see “credit” as a living-and-breathing creature that evolves throughout each loan’s life cycle due to a variety of behaviors, hence requires an end-to-end solution to properly address.
Since launching a few months ago, we’ve onboarded several customers and have live loan traffic on our platform. Our existing customers use Pier to provide a wide variety of credit products to their users, including BNPL for wedding, credit builder, BNPL for clean energy, salary advance loans, portfolio line of credit, etc.
Pricing - Monthly min Saas fee ($7-20k/mth), and a usage fee of 0.2-1.0% of loan volume for origination and servicing. This largely depends on the credit program and loan volume.
We’re building devtools to enable ...
76 comments
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(congrats on the launch!)
We currently use sameday, nextday and standard-ACH for fund flows. We're keeping a close eye on new payments rails like FedNow to speed up loan funding for borrowers and are looking to add more funding/payment methods soon!
We charge $20K-$50K for our services after they are completed. (We do contingent recruiting.) Some customers ask if they can pay over time. We don't want to offer that because we're already billing after all the work is done, so it makes our cash flow even worse than it already is.
What I want is to be able to say, "Sure, use this service and they will allow you to make payments over time." We get our money up front and they make payments to this service provider. They pay extra to the service provider for the convenience of making payments.
I don't want to factor. I want the burden of collection on someone else. Like Affirm for b2b.
Could we use your service to build something like this into our platform? Who is responsible for collecting?
I've had clients ask whether they can pay large (7 figure!) invoices on credit. Ah... nope. :)
https://developer.dnb.com/#/home
one callout here - it sounds like you're looking for someone to take on the balance sheet/collection risk, which is not something we do. we're saas only. our customers keep upside from offering credit (additional revenue, interest income, higher LTV, greater GMV etc) and also the balance sheet
https://news.ycombinator.com/item?id=26347962
really exciting to see what @Pier is building! Some thoughts for below:
Seems you guys are focused on end-to-end software tools and will rely on the business taking credit risk (and getting the balance sheet) instead of providing the loan yourself. Is that correct?
If that's the case, one thing to look out for is it's quite challenging to get your customers (paying $10-20k / mo) to trust your underwriting standards/origination tools. First question will be: why can you do it better?
One model that worked well is Opyn.eu in Italy that offers the software but has an agreement to buy any "loan" back from the creditor over the course of the payment.
Hope that helps and wish you the best of luck!
fyi most of our customers have their own balance sheet or debt facility and it's not an issue for them. they prefer this flexibility too bcus every business model is a bit different, so there's not rly an one-size-fits-all like debt setup.
I know first hand that this industry is a GRIND and most existing tech solutions are bloated and inefficient legacy systems so I think there is definitely space to disrupt the industry. Best of luck!
1. Who has the lending licenses? Given the website footer disclaimer says Pier isn't the lender. I would guess it's either a banking partnership or a license arrangement carried over from Stilt/JG Wentworth?
2. How does Pier think of itself in relation to someone like LoanPro (who from my industry conversations has had a lot of positive momentum as the best origination software) and the other origination/servicing platforms? I gather the idea is a bundled "origination + decision + servicing" platform.
LoanPro doesn't do the decision engine piece itself, but from what I gathered it was partially due to the precisely the complexity and compliance risks parent commenter noted.
Definitely best of luck to the team, as the space can always use better software than what I've seen at older institutions.
2) a lot of existing solutions such as loanpro are good at supporting "vanilla" credit products, but tend to struggle with "chocolate & sprinkles on top" like configurations. we've talked to so many companies who told us that after they purchased these existing solutions, but had to spend another 3-6mths+ of engineer resources to configure it to their use case, and even that is still quite brittle with more manual involvements.
these configurations impact the entire loan cycle from origination, APR calcs, state rules and many more. for example, repayment cycles pegged to salary schedules, irregular 1st payment date, balloon payments, min payment for lines of credit, etc.
Our credit application API will return an error if you try to approve a set of offer terms for a user that violates their state's limits.
We also have a couple utility endpoints that help with coverage and compliance checks: 1) a coverage endpoint that returns the basic limits for each state and 2) an endpoint that allows you to verify if a set of offer terms are compliant for a given state.
Operating as a licensed lender would allow you to have higher APR thresholds. For example in IL, unlicensed caps at 9% (which is not always economical), while licensed allows you to lend at 36%
If you handle getting the licenses for the company that is super valuable
for in-state offices, there are 3rd party agencies to work with to set those up. also recently, some states like NV have passed laws to remove this bottleneck.
I am also curious on the official answer though!
Are the credit models / risk flexible to the risk/return ratios required by the customer? How did you train the credit risk models?
Also curious how this works if the original lender wants to syndicate or sell the loan - is this possible on your platform?
bcus of this, our customers lean on us heavily for compliance - we replace at least 0.5-1 compliance headcount for them, plus all the legal dollars...
We don't provide debt. we provide an end-to-end credit infra that covers origination, compliance, loan management, credit reporting, etc.
one other call out is that we allow our customers' users to always stay on their platform, without being redirected to a 3rd party, so they own the full UX and user experiences.
our api docs - https://pier-dev.readme.io
Should wedding dress suppliers refuse all forms of credit and only accept proof of savings?
What retailers should be allowed to accept credit purchases, friend?
I never suggested that people should not be allowed to use credit for things. What I object to is making it easy for people obtain new credit at a POS or in such a nonchalant fashion that people do not think it through before it’s too late.
Credit for purchases and new credit are two different things.
I think you could get consumers to subscribe to discounts/deals at nearby restaurants and I think you could get restaurants to offer discounts one-time or during non-peak days/times. I tried to do this in the past using card issuing services (like Stripe's) but it was clunky with debit cards. The ability to do this via credit would make this a lot easier.
[0] https://enfuce.com
Do you cater to more complex credit products like loans to support acquisitions? These often require servicing of multiple companies in a group. This multi-entity requirement is where my frustrations are most acute, the lenders I work with catering to this more niche market.
Edit - UK based direct lending, but I’m sure the same is relevant to some extent in the US
Are you looking to stay focused on the credit management + compliance (I can see how that would be a huge job in itself in the US market) or do you think you'll look to become a one stop shop for everything needed to offer credit (like KYC, risk, etc)
Since you'll inevitably take over the world, hit me up when you start a London office :)
Why charge a monthly minimum and not just take a larger % of loan volume to make it more accessible to early stage Fintechs?
Those who are funded well enough to cover $10k monthly expenses can likely afford to go straight to some combination of LendFlow, LoanPro, Canopy, Peach, etc.
also, most existing solutions like canopy, peach are good for 'vanilla' use cases, but we keep getting demand from folks who wanna to do more flavors to be competitive & offer better user experiences (think chocolate, strawberry with cherries & sprinkles)
For existing customers, we have and are in the process of building monitoring systems to verify customers are sending required communications (ie signed loan agreements, adverse action notices, payment reminders, statements, etc) and that their decisioning aligns with the credit policy we've approved.
In the near future, we're going to build tools to automate/handle a lot of the compliance-sensitive processes/ops for teams that don't want to own it themselves. This will include Pier-powered user communications and underwriting, among other things. We'll have more to share on this soon!
Does anyone know if something like this exists for non-US markets?
what kinds of thresholds? (mainly curious since sandbox keys naively seem harmless to hand out)