Openpay hopes to cash in on BNPL craze

The catchphrase is ‘buy now, pay smarter’ for Afterpay rival Openpay, which lists on the ASX on Monday.

Openpay chief executive Michael Eidel has ambitious plans for the new ‘buy now, pay later’ credit provider, which lists on the ASX on Monday. Picture: Renee Nowytarger

The catchphrase is “buy now, pay smarter” rather than buy now, pay later for Afterpay rival Openpay, which is hoping some of the multi-billion dollar payments competitor’s lustre will rub off on to it when Openpay chief executive Michael Eidel rings the ASX bell on Monday.

Openpay is the latest BNPL provider to list on the local bourse, in a fast-growing sector that investors and regulators alike are watching with intense interest.

“We’ve had an exceptional few months,” Openpay chief executive Michael Eidel told The Australian. “We’re heavily oversubscribed, which gives us a lot of hope for listing day and the development of the share price.

“We’ve had great feedback and confidence that our differentiated approach really works.”

According to Mr Eidel, a former Commonwealth Bank executive who also had stints at Credit Suisse and McKinsey, “buy now, pay later” has the potential to become the new normal in terms of replacing credit cards for the majority of people, not just Millennials.

“It brings so many benefits for the merchant, but also for the consumer, so it really is a breakthrough innovation that will get even more traction of the next few years,” he said. “Australia has been leading obviously but since we launched in the UK in June we’ve had great uptake there, and we know it’s not something that’s going to go away.

“Banks and credit card players, the incumbents, are trying to catch up, and lending platforms are reaching into payments, and we think at Openpay we have a great differentiating approach to all the others across the industry. We want to become a leading player in this market, but also internationally.”

The Melbourne-based Openpay will trade on the ASX under ticker code OPY, and has raised $50m in an IPO at a price of $1.60 per share, valuing the company at $150m.

Mr Eidel said Openpay’s point of difference lies in its anti-fraud, credit check and customer identification technologies, that mean the platform is robust in a way its rivals are not.

“Our intellectual property means we’re the leading tech platform, that’s a real differentiator,” he said.

He added that Openpay generally has different customers and merchants to the likes of Afterpay, and said that the company stands for “buy now, pay smarter”, given it’s trying to be responsible with its product offering.

“Retail makes less than half of our business,” he said. “We’re focused on specialist industries like healthcare, automotive, and home improvement, and quite often we are the sole provider there or only one of two, which definitely gives us a competitive edge.

AfterPay’s payment plan is set at four fortnightly instalments, while Openpay allows for payment terms up to 36 months.

“It’s those areas where the longer and higher value plans come into play,” he said. “The other one is the focus on the consumer themselves. I call them savvy grown-ups, who use us more as a budgeting tool than a cheap source of credit. If you want to purchase different needs for your lifestyle, like automotive repairs and tyres, or healthcare for your furry friends, we can really add value and our customers appreciate the flexibility and convenience of what we’re doing.

“We’re taking a responsible approach with our product.”

The company makes money not from interest — it doesn’t charge any — but from establishment fees, which it charges on purchases over $1000, and plan management fees for the end customer.

“We want to become a renowned global brand in this fast-growing space,” Mr Eidel said. “We’re doing that in Australia and expanding into promising international markets like the UK.

“We have strong potential and a strong technology platform to bring value to our customers, our merchants, and obviously also ultimately our shareholders.”