Latitude extends interest-free deal for JB Hi-Fi stores

Latitude Financial says it has secured a four-year extension to a lucrative contract with JB Hi-Fi to offer interest-free instalments to online customers.

Latitude Financial Services chief executive Ahmed Fahour. Picture: NCA NewsWire / Ian Currie

Latitude Financial says it has secured a four-year extension to a lucrative contract with JB Hi-Fi – and The Good Guys chain, which it owns – to offer interest-free instalments to online customers.

Under the deal, Latitude’s Gem Visa card gives shoppers at the two chains interest-free periods of up to five years on a wide range of items.

Latitude’s deal with JB Hi-Fi was first signed in 2018, when the company – then unlisted – pried the contract from HSBC.

Latitude secured a five-year extension to a similar contract with Harvey Norman – providing interest-free payments and instalments to customers at some 230 stores and online – in September 2020.

The company did not disclose the financial impact of either of the agreements.

But Latitude chief executive Ahmed Fahour said the extension reflected “the importance in the current environment of merchants working with trusted partners that can be relied on to deliver for customers, as well as the value that our … instalment plans offer consumers at a time of rising costs”.

The extension includes using LatitudePay, the company’s buy now, pay later product, in the JB Hi-Fi and The Good Guys stores for purchases of up to $1000.

According to Latitude’s prospectus last year, interest-free instalment plans made up 57 per cent of the receivables in the company’s business-to-business-to-consumer model.

“Interest-free instalment plans form an important part of our payment offering and provide customers with choice on how they would like to shop with us, both in-store or online,” JB Hi-Fi chief executive Terry Smart said.

The agreement comes after a difficult month for Latitude. Its deal to acquire the consumer finance business of Humm collapsed in June amid deteriorating market conditions.

Analysts at Macquarie said they had estimated the deal would have been “double-digit accretive” this financial year and downgraded Latitude.

“While consumer stress has yet to play out in numbers, should it appear then we expect Latitude will be hit harder than comparative peers,” they wrote.