Payments aren't sexy, but you know what is? Shopping. That's why users are clamouring to get their favourite retailers on Afterpay's platform. With this growing demand for flexible payment terms, competitors have taken to the public markets. Here are the key players in Australia:
- Afterpay Touch Group Ltd (ASX: APT)
- Zip Co Ltd (ASX: Z1P)
- Splitit Ltd (ASX: SPT)
- FlexiGroup Limited (ASX: FXL)
Each company offers an interest-free buy-now pay-later (BNPL). They vary in payment terms, who harbours the risk, and the industry they are in.
The high betas of growth company share prices have caused BNPL players to suffer from global trade uncertainties. However, part of this downturn has been driven by regulatory headwinds. BNPL players are not legally required to perform credit checks and verify customer incomes as they are not regulated under the National Credit Act.
Despite this, consumers love the product and Afterpay's international success is not being deterred by domestic concerns. In my opinion, this creates an opportunity for investors who have been waiting for a good time to get into the BNPL industry.
Afterpay
Afterpay is currently down 17% since exactly a month ago.
Being the largest BNPL in Australia with a market capitalisation of $5.1 billion at the time of writing, Afterpay is at the forefront of the debate with our financial regulators. Though missed payment fees has reduced 4.9% to 17.6% as a proportion of revenue, this percentage is starkly higher than other players.
On the flip side, there seems to be nothing able to get in the way of Afterpay's rocketing growth. The company has already added 1 million customers in the United States (US) since March and is now operating in the United Kingdom (UK). Growth will be fuelled by its recent $300 million share purchase plan.
Splitit
Splitit is down a staggering 27% in the last month, for the same reasons as Afterpay.
Recently, Splitit has taken to the Asian markets. It partnered with EFT Payments Asia (EFTPay) this month to offer the monthly payment solution to Hong Kong and Macau merchants. This is a great move for the New York-based company.
Zip
Zip is down 22% in the last month.
Though there has been no news released on Zip recently, its metrics in 2019 have been positive. In its March quarter, Zip's revenue rose 20% on the previous quarter. It added 143,000 customers and brought its total to 1.2 million, supported by Zip's New Zealand expansion.
FlexiGroup
FlexiGroup is down 7%.
FlexiGroup is the original provider of BNPL services in Australia. However, it was pushed out of the market by the likes of Afterpay and Zip due to poor execution of its Certegy EziPay and OxiPay platforms.
However, it recently created a new platform, humm, which combined these two legacy platforms. Its most recent public announcement revealed that humm accounts for 17% of market share in the BNPL industry. humm boasts over 1 million customers shopping at over 13,000 seller locations and e-commerce platforms.
If you haven't put your stakes into the BNPL industry yet, this could be the best time to place your bets.
If this industry isn't for you and you're looking for cheaper stocks with lower valuations, perhaps you should take a look at these companies.
