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

Tristan Harrison
Buy now pay later

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.  

The post Afterpay, Zip and others are about to be disrupted by a new BNPL competitor appeared first on Motley Fool Australia.

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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.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020