Latitude adds payments reach with Catch Group deal

Latitude Financial is teaming up with Catch Group to ­extend the footprint of its ‘buy now, pay later’ platform.

Ahmed Fahour at Catch’s distribution centre in Truganina, west of Melbourne on Monday Picture: Stuart McEvoy.

Latitude Financial is teaming up with the Wesfarmers-owned online retailer Catch Group to ­extend the footprint of its “buy now, pay later” platform, Latitude Pay, with managing director and chief executive Ahmed Fahour confident it can dent the dominance of Afterpay.

With 1.5 million active shoppers on its platform, Catch offers Latitude an opportunity to consolidate its BNPL offering at a time when consumer appetite for such services is at an all-time high.

Mr Fahour said the concept was not necessarily novel or ­revolutionary, but had certainly struck a chord with retailers and consumers.

“BNPL is being described as a craze but instalment finance has been in the market for nearly 30 years,” he told The Australian. “The only difference was that the lowest transaction value available was around $1000, so it was for big-ticket items and over a much longer period.”

The exuberance in the market is driven by smaller ticket trans­actions, with the likes of ­Afterpay, Zip and new entrants such as Flexi­Group-backed Humm and Sezzle looking to offer consumers more payment options.

“The purchases are less than $1000, the repayment time is shorter and the space is unregu­lated. So the likes of Afterpay are new to the market, while we have been in this space for a very long time,” Mr ­Fahour said. “We decided we wanted to offer a BNPL service to millennial customers. We bought a New Zealand-based company called Genoapay late last year and then rolled it out to our merchants by April.”

Genoapay, according to Mr ­Fahour, has been a hit in New Zealand and has been rebranded in Australia as Latitude Pay. “We have signed up Harvey Norman, we have online travel company Luxury Escapes and now with Catch, which I believe is Australia’s most successful online merchant, we offer both big-ticket and small-ticket transactions,” he said.

Latitude is hoping investors will put a fair value on the runs that Latitude, which was bought by Kohlberg Kravis Roberts and its partners from General Electric in 2015, has on the board as it looks to get a $4bn IPO off the ground this month.

For Catch, which offers Afterpay and Zip as payment options to its customers, the addition of Latitude completes the circle. “All of the platforms charge a merchant fee. Afterpay is at the high end, Zip is in the middle and Latitude has come up with a significantly more attractive offer for merchants,” chief executive Nati Harpaz said.

“Margins are pretty tight and paying high merchant fees can be difficult for retailers. Meanwhile, consumers’ demand for BNPL is very high so merchants need to offer customers more choice of platforms and in turn also be able to spread the market across multiple platforms. We think Latitude offers more than just a product: they have an existing customer base and every one of them is a ­potential customer acquisition ­opportunity for us.”

Latitude Pay is touting no ­interest payments and zero merchant fees for purchases under $250 until January 2021.

With 2.6 million customer ­accounts and 1950 merchants across Australia and New Zealand, including Apple and JB Hi-Fi, Mr Fahour said that unlike Afterpay, BNPL wasn’t the only product on offer for Latitude.

“The big difference between us and Afterpay is that we have other products to offer to merchants when they come to our network,” he said. “We don’t have to make money from every customer on every transaction. We have other products that can service all of the needs of merchants. Our competitors only offer the one product and charge maximum fees because that’s all they do.”