Mastercard deal lifts Splitit

Recent BNPL entrant Splitit more than doubled its share price following the announcement of a new partnership with Mastercard.

Splitit CEO Brad Paterson.

Investors aren’t waiting to stock up on the buy-now, pay-later sector, with recent entrant Splitit more than doubling its share price in a blockbuster day on Thursday following the announcement of a new partnership with Mastercard.

Splitit shares climbed 108 per cent to $1.38 on Thursday, with investors lapping up news that the company would gain almost instant access to Mastercard’s 800 million cardholders globally.

The multi-year global deal with Mastercard builds on similar deals with Visa and online payments provider Stripe, both announced in January.

CEO Brad Paterson said the Mastercard partnership was years in the making, and further differentiated his company from rivals such as Afterpay and Zip. “We’re different to everyone in the market; we enable instalments on a consumer’s credit card, which means we use the credit they have and help them pay over time, unlike others who are issuing new financing to consumers.

“We’re excited that we got there with this partnership and now it’s time to execute,” he said.

Mr Paterson told The Australian the companies would pilot an integration in Britain, Canada and Australia before an anticipated broader rollout.

He said the partnership would not be limited to offering instalment options for customers, with the companies set to join forces in building new products and services.

“It’s important that we partner with the card networks, and this is an important piece to help us accelerate instalment payments throughout the world,” he said.

“This is all about innovation in the future; we’ve agreed to join forces with Mastercard’s innovation team to build new products. We’ll be extending beyond what we’re doing currently into different realms. We are uniquely positioned to serve anybody with a card, so anyone with a Mastercard is a potential customer. And this is a strong endorsement from them about what we’re doing.”

Mr Paterson became Splitit’s chief executive in September 2019 after stints at PayPal, Visa and accounts software-maker Intuit.

The executive had not seen Splitit’s share price, but when told of the spike said it was “well overdue”.

“That’s great. We’re delivering some value to shareholders, and that’s quite a significant chunk of value for them,” he said.

Splitit is headquartered in New York and has offices in Israel, London and Australia. It entered the Australian market through a partnership with Kogan in 2019, joining a crowded field of BNPL providers all jostling for clients. Mr Paterson said he expected consolidation in the market — and fewer players — over time.

The sector has been red-hot in recent years, with Afterpay climbing from its IPO price of $1 to its new high of $59.50 on Thursday.

Afterpay, which recently announced a partnership of its own with Chinese tech giant Tencent, said COVID-19 had been a boon for its business.

A 32 per cent decline in cash usage meant more customers were turning to instalment payments. BNPL providers have largely avoided heavy-handed regulation that some investors feared, though a current senate committee on fintech regulation is still mulling potential reform like mandatory credit checks.

“Consumers want choice. Some will choose buy now, pay later at point of sale, others will choose the financial institutions they do today,” Mr Paterson said.

“It’s all driven by the consumer wanting more choice and flexibility, and we feel there’s nobody doing what we do in the space.”

Thursday was also a positive day for fellow payment outfit Pushpay, which upgraded its guidance, sending shares up 10 per cent while Zip was down 2.5 per cent and Afterpay up 0.2 per cent.

Listed BNPL provider Openpay was down 3.5 per cent at $2.51.