New Zealand’s leading BNPL provider, Laybuy (ASX: LBY) has reported an impressive year across the board, proving that there is space yet to grow in the seemingly saturated sector.
Since its inception in 2017, Laybuy has gone from strength to strength with a seemingly well timed entry into the BNPL market.
Laybuy is now recognised as one of the top three providers of BNPL services in the United Kingdom and is using their momentum to continue to build brand awareness in Australia.
The platform differentiates itself from its competitors by offering features like Laybuy Boost, Laybuy Global and Tap to Pay.
Inspired by the traditional layby model, customers pay 6 weekly installments with no interest, ever. Credit checks are carried out and limits are put in place to make sure customers are not taking on debt that they can’t afford. Late fees are also capped to avoid debt spirals.
The responsible lending approach is a win-win, enabling merchants to uplift sales whilst protecting customers from the high interest rates associated with credit cards and accruing excessive debts. Customers pay no admin fees and have flexibility with payment days.
Merchants have lower product return rates, the potential for improved order value and more customers through the offering of a convenient payment solution.
The financial year saw Laybuy’s ASX listing and $40 million IPO raise in September last year. The Company has also reported a 137% increase in total group income to $32.6 million thanks to its rapidly expanding merchant (up 75%) and customer base (more than double last year’s to 756,000).
The Company’s EBITDA is up $5.5 million from $16.2 million in 2020 to $21.7 million in 2021, representing a 35% increase.
With $15 million in the bank, Laybuy is keen to continue their growth trajectory with platform enhancements to support operational efficiencies and increasing their market share in already established markets. The Company is looking to accelerate growth in the UK via targeting of large influential merchants in the region to drive scale.
Tap to pay allows an in-store BNPL option and skips a number of steps required for customers and merchants to facilitate BNPL transactions in store. The digital card feature has been earmarked for growth and expansion in partnership with Mastercard globally to accelerate adoption of BNPL in stores. The feature is already in use in Australia, New Zealand and the UK.
Investors are wondering how and if Laybuy will pull away from the BNPL pack of established and emerging companies with prolific Afterpay and Zip now well and truly household names. Klarna, humm, Sezzle, OpenPay.. In fact, pop ‘pay’ onto the end of any word and I’ll bet you that there’s a BNPL with that name.
Laybuy’s value prop may lie in their focus on the responsible provision of credit, which has seen their average default rate stay at less than 3%. Much scrutiny has been cast over the BNPL sector due to lack of formal regulation after the recent Royal Commission, however it seems that Laybuy is layering responsibility and transparency into the folds of their business, increasing trust and potentially, securing themselves a larger slice of the After-pie.