Now to talk about this announcement of partnering with MYP1!...

Now to talk about this announcement of partnering with MYP1! It's a huge positive. This is exactly the kind of partnership that IOU is looking for, with being able to access the sales force of MYP1 (without paying for it), in pushing out IOU's BNPL capabilities to the 15,000 merchants over time and initially the 2,800. So let's now add this to the previous announcements with ipay88 and EasyStore merchant access and this brings the total merchants accessible to IOU at 85,000 . Importantly, quarterly announcements now are going to tell a story of how the rollout is going, and as those metrics start to get publicized, you can bet there will be alot of eyes on IOU. There are plenty of big boys out there looking to enter the space and history has shown that many look to see traction before taking an easier path to entry via a strategic stake (like Tencent did) or acquisition (Affirm, Klarna). So my personal opinion only is that a strategic stake becomes a distinct possibility as IOU further grows its presence in Malaysia (and other SEA regions) through partnerships like this and the others they've announced and no doubt have in the pipeline.

Again think about IOU for a second - it's only a $220m market cap company and forecasts of just how big BNPL will be in SEA, suggest it will be in the multi billions. According to CMI, globally BNPL is a market that’s set to grow from US$7.3 billion in 2019 to US$33.6 billion in 2027 at a compound annual growth rate (CAGR) of 21.2%.In this timeframe, Asia-Pacific is forecast to be the fastest-growing region owing to increasing Internet users. 40 million new users joined Southeast Asia’s digital economy in 2020 alone, bringing the total number of Internet users in the region to 400 million, according to ESEA Report 2020.

Other reasons for the strong up-take in SEA according to e27.co include:

1. Southeast Asia has a young age group demographic who have historically been the biggest users of BNPL. In Australia, the National Retail Association found that the BNPL market is dominated by customers under 35 years, accounting for more than half of total BNPL users while being less than 20 per cent of the population.This is attributed to young users being early adopters of innovative solutions and typically having limited finances, resulting in the preference to pay in installments. Based on this, Southeast Asia’s population seems to hold outsized potential for BNPL, given that the median age for all Southeast Asian countries (save Singapore and Thailand) are below 35 according to Statista.
2. The underbanked population of Southeast Asia. According to a 2019 brief by Bain & Company, more than 70 per cent of adults in Southeast Asia (roughly 450 million) are either “underbanked”, have no access to credit cards or have no long-term savings product, or “unbanked,” without access to a basic bank account.BNPL seeks to eradicate this barrier by making it hassle free to apply for installment plans, without the need for a credit card. With a market size of nearly half a billion potential users, Southeast Asia’s underbanked population is ripe for BNPL’s capture.
3. The growth of e-commerce in Southeast Asia highlights the viability of BNPL in the region. The two go hand in hand, as the usage of BNPL payment services are derived from e-commerce transactions.

IOU has entered the space at the perfect time, and importantly is well capitalized and well resourced to capture a good share of the SEA market over time. As they continue to develop their capabilities, sign up strategic partners that broadens their access, and deploy capital intelligently as they are doing, it won't be long before they start to enjoy valuations akin to their peers trading in the US$ billions as they hit strong merchant take up and customer take up metrics. A matter of time in my opinion - and with that, the potential for strategic stakes in IOU and/or acquisitions by the big boys all keeping a watchful eye.