Buy now, pay later boosts sales

● Financial services and retail group HomeChoice is ramping up its fintech offerings with plans to add a number of products to accelerate growth.

HomeChoice’s newly created subsidiary Weaver Fintech — which will house its financial services operations, including FinChoice — recently said it had bought 85% in PayJustNow, the provider of a “buy now, pay later” (BNPL) credit model. It also plans to add new features, including a mobile app and an instalment payment service that will allow consumers to buy goods at some retail stores with flexible payment options.

Weaver Fintech sees the BNLP segment, which has 180,000 customers, up from 30,000 in August 2019, as one of its key growth areas.

FinChoice CEO Sean Wibberley said with this growth rate, “I see us being able to hit over a million [customers] ... the [growth] trajectory is right.”

BNPL is one of the fastest-growing segments in the booming payments space as it appeals to customers who want to buy goods but don’t have the immediate funds, and it drives sales for merchants.

With BNPL, customers can buy goods and pay over three instalments with no interest fee. The first instalment is made when purchasing the goods in-store or online, and the remainder is deducted directly from the purchaser’s bank account.

BNPL differs from lay-by as the customer gets the product immediately — before the remaining instalments are paid.

According to Weaver Fintech, analysts predict consumers globally will have made nearly $100bn (about R1.49-trillion) in retail purchases using BNPL in 2021, up from $24bn in 2020 and $20bn in 2019.

In SA, companies such as Blue Label and TymeBank have also entered the BNPL market. TymeBank partnered with PayFast to launch MoreTyme. The feature will benefit merchants, who will be paid upfront in full, and customers, who get their orders fulfilled immediately.

Craig Newborn, CEO of PayJustNow, said recently retailers using BNPL programmes are seeing sales boosts of up to 30%, with an increase in average basket size of up to 35%.

Since customers are not paying interest, Wibberley said, the company will make money by charging a fee for processing payments. He said the BNPL model gives consumers another payment option, but he sees it cannibalising traditional hire-purchase arrangements over time. However, there will always be consumers who will opt for longer payment periods due to financial constraints. Weaver Fintech’s BNPL service can be used at 1,165 merchants in SA.

In the year to December, Weaver Fintech’s active customer base increased 106% to 450,000. This includes the recently acquired PayJustNow’s 180,000 customers.

FinChoice grew loan disbursements 73.8% to R3bn in the year to December. Trading profit grew 69.1% to R279m, supported by, among other things, strong growth in customer numbers.

“This is the strongest year we have ever had,” said Wibberley.

Overall, HomeChoice group revenue grew 4.8% to R3.4bn on the back of FinChoice’s performance.