Openpay takes on AfterPay as ASIC probes buy now, pay later market

‘Buy now, pay later’ provider Openpay is taking on rival AfterPay head on, as ASIC probes the sector for potential risks.

Openpay chief revenue officer Dion Appel.

“Buy now, pay later” provider Openpay is taking on rival AfterPay head on, as the corporate regulator probes the sector for potential risks to customers.

ASIC is in the midst of an investigation into the buy now, pay later sector after Afterpay was allegedly caught letting a 16-year-old girl with no job and $80 in the bank buy $300 of French champagne, and also to register as mickey mouse in Spanish.

Statistics seen by The Australian showed more than 80 per cent of AfterPay’s users are women in their 20s, with many using the service for an impulse buy — for example, buying a jacket they see in the shop window.

OpenPay chief revenue officer Dion Appel told The Australian his company’s customer base weren’t millennials, but 30 to 40-year-olds.

“They’ve got jobs, houses, cars, pets, and possibly young children,” he said.

“They’re asset rich but sometimes cash flow poor. We’re able to provide a solution to enable them to live the life they want to live within their means, giving them more time to pay.”

According to Mr Appel, given the company’s customer base is older, and it offers longer payment terms, its qualification criteria needs to be far more robust. AfterPay’s payment plan is four fortnightly instalments, while chief rival Openpay allows for payment terms up to 36 months.

“The responsibility on us from a lending perspective becomes a critical function to the success of our business today, and long term,” he said.

“Algorithms and data points that we bring together to deliver us a score rating on the individual needs to be slick, and something we can absolutely rely on.”

“Because we’re doing those checks from day one, it’s been built in since the beginning. We have a very low bad debt rate within our business and late fees not a material number on our books.”

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.

“When you total that out over duration of the plan, you would be well ahead of what you would pay in interest on a credit card,” Mr Appel said.