Afterpay, Zip and others are about to be disrupted by a new BNPL competitor

There is about to be more BNPL competition for Afterpay Touch Group Ltd (ASX:APT) and Zip Co Ltd (ASX:Z1P).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Watch out Afterpay Touch Group Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and others, there's some new buy now, pay later (BNPL) competition coming.  

According to reporting by the Australian Financial Review's Street Talk, New Zealand based business Laybuy will soon be aiming to hit the boards of the ASX with a listing.  

What is Laybuy? 

It's a similar concept to the others with an instalment system.  

First, customers set up an account and then Laybuy performs a credit check to verify details and apply a Laybuy limit.  

There are no sign up fees, and customers only pay the price of the purchase if they pay the instalments are paid on time. It can be done for products online or in-store. The instalments are split into six automatic weekly payments on the day the customer chooses.  

A late fee of $10 or £6 may be applied for each missed payment. You may notice the British pound there – Laybuy is currently expanding in the UK. According to materials seen by Street Talk, Laybuy expects to make 73% of its gross merchandise volume (GMV) from the UK by March 2021.  

How big is Laybuy?  

It's the market leader in New Zealand and it has approximately 4,300 merchants with 410,000 consumers.  

According to the AFR, Laybuy made $6 million of revenue in the 12 months to September 2019, excluding late fees. In FY19 it saw $115 million of GMV. By 2021 it's aiming for $677.6 million of GMV.  

Is this bad news for Afterpay? 

Another BNPL business on the ASX doesn't change things for Afterpay in share market terms, particularly as Laybuy is only aiming for an initial market capitalisation of $200 million.  

However, more competition in the BNPL space could affect the actual operations a little, particularly if Laybuy takes away UK growth from Afterpay. 

As time goes on we'll see if consumers treat different BNPL players as being brands or just as commodities. For Afterpay's sake I hope it has a strong economic moat to protect against all these new competitors.  

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

A smiling travel agent sitting at her desk working for Corporate Travel Management
Growth Shares

My 2 best ASX growth shares to buy in November

Growth continues to catch the market's attention.

Read more »

a man looks down at his phone with a look of happy surprise on his face as though he is thrilled with good news.
Growth Shares

Buy these ASX growth shares for 16% to 25% returns

Analysts are saying good things about these buy-rated shares.

Read more »

two children squat down in the dirt with gardening tools and a watering can wearing denim overalls and smiling very sweetly.
Growth Shares

How to maximise $10,000 by investing in 2 ASX growth shares

Here are my best growth ideas on the ASX right now.

Read more »

A man sees some good news on his phone and gives a little cheer.
Growth Shares

These ASX 200 growth shares could rise 50% to 60%

Big returns could be on offer from these growing companies according to analysts.

Read more »

Sports fans looking at smart phone representing surging pointsbet share price
Growth Shares

Up 111% in six months, this soaring ASX share is backed to keep rising

One fund manager thinks this ASX growth share can continue its phoenix performance.

Read more »

a happy investor with a wide smile points to a graph that shows an upward trending share price
Growth Shares

These ASX growth shares are being tipped to smash the market

Returns of 14% to 68% could be on the cards for buyers of these shares according to brokers.

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Growth Shares

These ASX 200 growth shares could rise 50% to 70%

Analysts are predicting these stocks to rise materially from current levels.

Read more »

A young boy sits on his father's shoulders as they flex their muscles at sunrise on a beach
Growth Shares

2 ASX 300 growth shares with 'strong momentum' this fund manager says are buys

These two stocks have plenty of growth potential, according to experts.

Read more »