Melbourne-based “buy now pay later” outfit Payright is making the most of the “Afterpay effect”, raising fresh funds to expand its loan book and merchant footprint.
While the likes of Afterpay and Zip are focused on helping consumers buy small-ticket items (average cost $150) on lay-by, Payright is serving a different segment of the market, with an average transaction price between $2000 and $2500.
Having built a customer base of about 20,000 over the past three years, Payright has now completed a Series D funding round of $27 million, through a mix of debt and equity.
The raise, led by corporate advisory firm Henslow in partnership with wealth manager Escala Partners, tips Payright’s total capital raised to more than $55m and gives it the ammunition it needs to make the most of the current consumer appetite for “buy now pay later” services.
Payright co-founder and joint CEO Piers Redward said the company would use the funds to further extend its niche in the market. “Our target market is different to that of Afterpay and Zip; we have different mix of merchants and serve customers who are making a considered purchase.”
Currently, Payright has about 1500 merchants on its books and the higher average transaction price means that it is able to provide the service to a wider range of businesses, including home improvement, professional photography, health and travel.
According to co-founder and joint CEO Myles Redward, there’s no reason why the “buy now pay later” feature couldn’t be extended to a wider range of industries. “Our sweet spot is between $1000 to $5000 and repayments can be between 3 to 36 months,” he said.
“As we move further into the home improvement and solar installation market, we are looking to extend credit available to consumers.
“The ‘buy now pay later’ trend is still in its infancy, the sector doubling every six months and currently cover only about 10 per cent of the broader retail market. More businesses across varied industry types are going to start offering this type of service.”
Greater adoption is likely to generate greater scrutiny from regulators and it’s something Payright is keeping a close eye on.
“Both Myles and I come from financial sector backgrounds and compliance is one thing we are very mindful of. A lot of our process and capabilities have been built with that in mind,” Piers Redward said.
“The issues that Afterpay recently came across, we solved that at the start of our journey. We carry out credit checks on our applicants as well as ID verifications; they are subject to a detailed, albeit quick, underwriting process.”
He added that while there was a risk of regulatory settings changing in the future, greater transparency was good for the long-term adoption of the trend.
With the prospect of Visa and Mastercard also offering similar services, businesses such as Payright also face the risk of being outmuscled in the market.
However, the Redwards aren’t overly concerned.
“The credit cards companies see the opportunity but the one thing in our favour is that we can be more transparent with the application and the payment process.”Back