Latitude Financial’s buy now, pay later expands to bigger ticket items

Latitude Financial is expanding its interest-free offering to bigger ticket items, including home renovations and medical procedures.

Latitude Financial chief executive Ahmed Fahour: ‘What we want to do is create a seamless platform where you can go up and down the spectrum.’ Picture: Aaron Francis

Latitude Financial is expanding its interest-free offering to bigger ticket items, including home renovations and medical procedures for customers and their pets, as buy now, pay later shopping surges at the expense of traditional credit cards.

The non-bank lender will progressively lift the limit of its BNPL offering from $3000-$5000 to $10,000 by March and then $30,000 in the second half of 2021.

Chief executive Ahmed Fahour said the company’s interest-free LatitudePay platform had reached more than 500,000 customers in its first year of operation and had become a popular alternative to credit cards, the use of which has sunk to a 15-year low as Australians seek out cheaper lending services.

He said while BNPL services had been popular on goods priced up to $1000, more of its customers were demanding the platform be extended to high-value purchases including surgery and dental procedures such as orthodontics and costly medical operations for cats, dogs and other pets. “The other one is home renovations. It’s not just the more basic items. Some of the healthcare costs … orthodontics is an $8000 process all up from start to end,” Mr Fahour said.

“Then there are pets. If you have an incident with your dog or cat, you can’t walk away from a couple of grand worth of costs. They are part of the family.

“What we want to do is create a seamless platform where you can go up and down the spectrum — you can go as low $20 with Latitude all the way up to $10,000 and by next year up to $30,000.”

While Latitude has been a beneficiary of an explosion in online shopping during the COVID-19 pandemic, it has not escaped completely unscathed from the coronavirus. It has had to streamline its operations, closing offices in Sydney and Brisbane, been through redundancies and redeployed more than 300 people, or 20 per cent of its workforce, to higher growth parts of the business.

Mr Fahour said its credit card business, which has slashed the number of offerings from nine to three as part of a strategic reset, had taken a hit during the pandemic, as consumers looked to reduce debt.

From the beginning of the coronavirus pandemic, Australian credit card holders have wiped $6.3bn in the amount owing across all accounts, a 23.5 per cent reduction. According to the RBA, 13.1 million credit cards are in circulation, the lowest number since April 2008.

“The balance of the whole country for credit cards is equal to where it was 13 years ago. People have definitely paid down their debts and demand for personal loans to go buy cars, take a holiday or purchase some items, is down to where it was three years ago and in the last 12 months is down 30 per cent,” Mr Fahour said.

“So we have let attrition take care of some resources, redeployed people into other areas — LatitudePay is going nuts for us.

“Some people look at their business and say demand is down so I’m going to reduce my resources. But we have been slightly more sophisticated and thought about how to redeploy, because they’re your staff, your people and are really valuable.”

From its launch partner Harvey Norman, Latitude has signed up 920 brands to its BNPL platform, including PETStock, Cotton On and Pharmacy Online.

Mr Fahour said its customer hotspots were Carlton North in Victoria, Lane Cove in NSW and Claremont North in WA where it was attracting mainly millennial shoppers.