The BNPL rival coming for Afterpay’s crown
There is disruption in the buy now, pay later (BNPL) space with a number of smaller competitors are coming for Afterpay’s crown.
Afterpay is known as the industry leader, the service had almost 10 million users and 55,400 active merchants and the firm said it added 20,000 new consumers worldwide daily in the fourth quarter, but its share price growth has been outpaced by two rivals.
There was also news last week that US payments firm PayPal would be entering the BNPL market in Australia.
Since the start of the year to 31 August, 2020, the best-performing BNPL firm was Sezzle which reported growth of 391%. The US firm listed on the Australian Securities Exchange (ASX) in July 2019 and had risen 366% since then. In its half-year results to 30 June, the firm said it had 1.4 million active users and over 16,000 merchants.
These gains compared to losses of 7.4% by the ASX 200 index over the same period.
The stock was held by OC Dynamic Equity and OC Micro-Cap funds, both at 3% weightings.
In its latest update, the OC Micro-Cap fund said the appeal of BNPL providers was the growth in e-commerce caused by the pandemic.
“Sezzle was a stand-out with an array of positive news flows, a successful capital raising and broader awareness of the company among the investment community all shining a positive light of the company,” it said.
“The market has gained an appreciation that the pandemic would help to drive adoption of Sezzle’s offering as online shopping surged in popularity due to social distancing restrictions and consumers’ fears around shopping in-store. The buy now, pay later segment has two key tailwinds, namely millenial’s aversion to credit cards and the growth in e-commerce.”
Openpay Group saw share price of 245% while Afterpay reported gains of 212%.
Openpay, which only listed on the ASX in December 2019, had far less users than Sezzle and Afterpay with 109,000 users and 2,000 merchants. There were not yet any Australian funds holding OpenPay, according to FE Analytics.
Meanwhile, Splitit Payments, which was another US firm, and ZipCo saw gains of 181% and 158% respectively.
AUTHOR
Laura Dew
Recommended for you
Outflows from an Australian private markets fund manager have caused FUM at Pacific Current to decline by $1 billion in the last quarter.
Former RIAA chief executive Simon O’Connor has joined the ethical advisory panel at U Ethical Investors.
Financial services leaders are “all cashed up with nowhere to grow” when it comes to M&A activity, according to Deloitte, with 90 per cent saying they have strong balance sheets ready for an acquisition.
As fund managers are urged to diversify their product ranges, they are finding a faster way to do this is via an acquisition of existing firms but experts say it is not without potential culture clashes.
