London-based Raylo has raised £6.5m for its tech subscription payment platform in a funding round led by Wayra UK.
Raylo offers an alternative way to purchase tech hardware. Consumers lease new and refurbished devices like phones and laptops from the company, paying a monthly fee for the length of the contract.
Customers can then either renew their subscription, apply for an upgrade, or return the hardware to Raylo.
“Subscriptions are a fundamentally better way to sell any durable product with a regular upgrade cycle,” said Raylo co-founder and CEO, Karl Gilbert.
“Retailers enjoy a significant conversion uplift, consumers pay a fraction of the cost each month, and we avoid the wastefulness that has been encouraged under other payment models.”
The investment round included participation from Telefónica subsidiary Wayra UK, as well as existing investors Octopus Ventures and Macquarie.
“There is a clear shift in consumer behaviour and their preference for subscription-based payment models,” said Bruno Moraes, managing director of Wayra UK.
“There’s an appetite for more affordable options to purchase great technology and devices. The Raylo team has proven success in delivering on this consumer trend, and we look forward to helping them scale up their platform through our strategic resources and networks.”
Alternative payment methods for expensive products and services have become more appealing due to an increase in the cost of living.
However, there has been concern that breaking payments into instalments, as seen in the buy now, pay later industry, leave consumers at greater risk of entering into debt.
Earlier this month, the UK financial regulator wrote to more than 3,000 financial services executives urging consumer protection during the cost of living crisis.
The letter noted that splitting costs into multiple payments can mean financially at-risk consumers take on extra debt without realising the true cost of their purchases.