BNPL Space Heats Up Further As Zebit Prepares To Hit ASX 

  • Sep 17, 2020 AEST
  • Team Kalkine
BNPL Space Heats Up Further As Zebit Prepares To Hit ASX 

Summary

  • Amid COVID-19, when payment preferences are shifting from cash to cashless transactions, BNPL sector is witnessing burgeoning opportunities. 
  • Many big names are entering the BNPL space, further heating up the competition.
  • US-based e-commerce company Zebit is planning an initial public offering on the Australian Securities Exchange. The company with no plans to offer its products in Australia for now, is looking to raise USD 30 million.
  • Recently, the new Pay-in-4 product announcement by PayPal created a ripple in the market, and share prices of all ASX-listed BNPL companies experienced declines. 

Buy Now Pay Later (BNPL) space has been growing fast amid the new norm of 'digitalisation'. During the COVID-19 pandemic environment, there has been a radical change in consumer payment preferences with a rapid rise in online shopping and simultaneously from cash payments to cashless transactions.

Also read: BNPL strong run on ASX & changing stance on stimulus: Are stocks done with the run-up?

As the BNPL sector is witnessing burgeoning opportunities, growing customer base and increased revenue, many top companies are entering the space with blockbuster plans, taking the competition to the next level.

Zebit All Set to Join ASX-listed BNPL Club

New in the list is US-based e-commerce company Zebit, which is planning to hit the Australian Stock Exchange, eyeing to capitalise on the lucrative opportunities in the BNPL marketplace.

The company is looking to raise USD 30 million from investors in an initial public offering (IPO) on the Australian Securities Exchange (ASX). Zebit has maintained that though it considers ASX as the best place for capital raising, there are no plans to offer its products in Australia as of now.

Zebit Founder and Chief Executive Marc Schneider expects the IPO to churn out success on ASX similar to another US-based BNPL player Sezzle Inc. (ASX: SZL). Sezzle got listed in July 2019 on the ASX at AUD 2.39. On 27 August 2020, the stock hit its 52-week high of AUD 11.830.

About Zebit

San Diego-headquartered, Zebit was established to aid people who have credit-challenges and offer them the ability to buy what they want and make payment over time.

Zebit vouches on three pillars -

  • No Boundariesthat empowers people to shop from anywhere and anytime
  • No harm - shop from trusted e-commerce service providers that promote positive repayment behaviour with stability and financial growth
  • Last but not least, No-nonsense, which means Zebit uses transparent and straightforward language to earn the customers' trust

Last year in 2019, the San Diego Business Journal named Zebit as number 2 fastest-growing private company of San Diego. The company has already secured nearly USD 50 million in venture capital funding and a further USD 5 million via a pre-IPO convertible note. 

How Unprecedented COVID-19 Crisis Influenced the BNPL Sector

The world is undergoing an economic turmoil right now due to the ongoing pandemic. Businesses have shut down, and there have been massive layoffs. Amid the considerable uncertainty, people are now spending less and trying to save more for the rainier days. 

Consumers are looking for more flexible payment options, and the pandemic has created more interest and awareness of instalments payments. It is wildly popular among the young generation or those who lack steady employment during the epidemic.

PayPal Entering the BNPL Sector Heats Up The Competition

The recently announced new product Pay-in-4 by American online payments company PayPal in the US has further heat up competition in the BNPL space. The announcement created ripples in the Australian BNPL sector, post which, top BNPL companies experienced declines in their stock prices.

On 1 September 2020, the share price of Afterpay Limited (ASX: APT) dipped by 8.04 per cent to AUD 84.09, Zip Co Ltd (ASX: Z1P) went down by 12.77 per

cent, SZL fell by 14.70 per cent, Openpay Group Limited (ASX: OPY) declined by 7.18 per cent, and Splitit Payments Ltd (ASX: SPT) dipped by 7.26 per cent. 

Swiss investment bank UBS termed PayPal entering the BNPL sector as a significant turning point. The multibillion-dollar company has more than 300 million customers.

The Pay-in-4 service is expected to be made available in Q4 2020. The service will come at no extra cost to merchants, and their fee to PayPal would be reportedly approximately 2.4 per cent. However, customers who make their payments on time, will get to use the service for free.

Must Read: Is this record-breaking ASX 200 player on a correction mode: Afterpay share price & sector squeeze?

Other BNPL Players Booming on ASX

When majority of other businesses are reeling under the pressure of pandemic environment, BNPL space players are booming. Shares of several sector players are soaring on the ASX. With growing customer base and increasing sales, they are also setting out plans to expand their services further.

In FY20, Afterpay registered an increase of 112 per cent in global underlying sales, while another major ASX-listed BNPL service provider Zip Co Limited achieved record full-year revenue of AUD 161.0 million, up by 91 per cent YoY.

Good Read: ASX Fintech Stocks- Afterpay and Zip Co Reverting to Mean Value

The BNPL sector is growing and hence bound to be more competitive. With new players coming in, the entire industry is expected to experience many changes and provide enhanced consumer experiences in the future.

 

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