The Australian 15 December 2019
Openpay hopes to cash in onBNPL craze
The catchphrase is “buy now, pay smarter” rather than buy now, pay later for Afterpayrival Openpay, which is hoping some of the multi-billion dollar paymentscompetitor’s lustre will rub off on to it when Openpay chief executive MichaelEidel rings the ASX bell on Monday.
Openpay is the latest BNPL provider to list on the local bourse, in afast-growing sector that investors and regulators alike are watching withintense interest.
“We’ve had an exceptional few months,” Openpay chief executive MichaelEidel told The Australian. “We’re heavily oversubscribed, which gives us a lotof hope for listing day and the development of the share price.
“We’ve had great feedback and confidence that our differentiatedapproach really works.”
According to Mr Eidel, a former Commonwealth Bank executive who also hadstints at Credit Suisse and McKinsey, “buy now, pay later” has the potential tobecome the new normal in terms of replacing credit cards for the majority ofpeople, not just Millennials.
“It brings so many benefits for the merchant, but also for the consumer,so it really is a breakthrough innovation that will get even more traction ofthe next few years,” he said. “Australia has been leading obviously but sincewe launched in the UK in June we’ve had great uptake there, and we know it’snot something that’s going to go away.
“Banks and credit card players, the incumbents, are trying to catch up,and lending platforms are reaching into payments, and we think at Openpay wehave a great differentiating approach to all the others across the industry. Wewant to become a leading player in this market, but also internationally.”
The Melbourne-based Openpay will trade on the ASX under ticker code OPY,and has raised $50m in an IPO at a price of $1.60 per share, valuing thecompany at $150m.
Mr Eidel said Openpay’s point of difference lies in its anti-fraud,credit check and customer identification technologies, that mean the platformis robust in a way its rivals are not.
“Our intellectual property means we’re the leading tech platform, that’sa real differentiator,” he said.
He added that Openpay generally has different customers and merchants tothe likes of Afterpay, and said that the company stands for “buy now, paysmarter”, given it’s trying to be responsible with its product offering.
“Retail makes less than half of our business,” he said. “We’re focusedon specialist industries like healthcare, automotive, and home improvement, andquite often we are the sole provider there or only one of two, which definitelygives us a competitive edge.
AfterPay’s payment plan is set at four fortnightly instalments, whileOpenpay allows for payment terms up to 36 months.
“It’s those areas where the longer and higher value plans come intoplay,” he said. “The other one is the focus on the consumer themselves. I callthem savvy grown-ups, who use us more as a budgeting tool than a cheap sourceof credit. If you want to purchase different needs for your lifestyle, likeautomotive repairs and tyres, or healthcare for your furry friends, we canreally add value and our customers appreciate the flexibility and convenienceof what we’re doing.
“We’re taking a responsible approach with our product.”
The company makes money not from interest — it doesn’t charge any — butfrom establishment fees, which it charges on purchases over $1000, and planmanagement fees for the end customer.
“We want to become a renowned global brand in this fast-growing space,”Mr Eidel said. “We’re doing that in Australia and expanding into promisinginternational markets like the UK.
“We have strong potential and a strong technology platform to bringvalue to our customers, our merchants, and obviously also ultimately ourshareholders.”
David Swan is a tech reporter for The Australian.
With deep experience acrossstart-ups, business and tech David is uniquely positioned to cover Australia’sfast-growing technology ecosystem.
