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Why the Splitit share price rocketed 10% higher today

James Mickleboro
share price higher

The Splitit Ltd (ASX: SPT) share price has been in fine form on Wednesday.

In early afternoon trade the payments company’s shares are up 10% to 54.5 cents.

Why is the Splitit share price charging higher today?

Investors appear to have responded positively to the release of a presentation out of the company this morning.

That presentation looks to have been designed to highlight to investors how Splitit differs to fellow buy now pay later companies such as Afterpay Touch Group Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P).

For those that are not familiar with the company, Splitit provides a business process and technology platform that allows merchants to offer buy now pay later instalments to credit card holders.

This means that consumers can receive an interest free instalment payment option instantly at the point of sale by using their existing credit card limit without further application or approvals.

By doing things this way, both credit checks and underwriting are completed by the card issuer and consumers have upwards of 36 months to pay back the money owed.

This also means that Splitit is not competing with card issuers, processors, and networks such as Visa and MasterCard, but in fact is complementing these services.

So much so, the company believes that Visa’s entry into the buy now pay later market will be a big positive for it.

This is because Visa is trialing technology (instalment APIs) that will allow individual card issuers to develop their own instalment plan solution. Management believes that open API’s will allow third parties like Splitit to access and build improved customer experiences.

Overall, management feels it is “uniquely positioned to leverage the new technology given it is the only global instalment solution built on the credit cards networks.”

Whilst this is very promising, I would suggest investors wait to see if this results in a big improvement in its sales over the next 12 months. After all, at its last update the company reported merchant fees of just $556,000 for the March quarter.

Instead of Splitit I would suggest investors consider buying this hot small cap stock which has been tipped for very big things.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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. 2019