American fintech up-and-comer Sezzle is about to launch in Australia hoping to ride the popularity wave of buy-now-pay-later schemes that are attracting customers in significant numbers.
Sezzle has confirmed its ambitions to raise $40 million and list on the Australian Stock Exchange as early as next month.
Although Sezzle says it does not intend aggressively competing on the Australian market it will offer credit facilities to local consumers – even though its primary target is getting a foothold in America.
The decision to list on the ASX puts Sezzle in direct competition with Australia’s homegrown buy-now-pay-later highflier Afterpay and the proliferation of similar companies including Splitit, Zip Pay, Zip Money, who are already listed on the ASX along with OpenPay, Oxipay and Brighte.
Strategists say the potential of the buy-now-pay-later Australian market is big enough to cope with several business blueprints, the same way major credit cards compete for the same customers.
A senior IBIS industry analyst says that despite the rush of companies onto the local market, the entire buy-now-pay-later sector was still in its infancy in Australia.
According to Tommy Wu, from IBIS, major companies would eventually establish their profile and emerge as market leaders.
Sezzle co-founder Paul Paradiss says his company is ready to take advantage of the shortcomings in the American financial markets.
“Sezzle exists because we believe the credit system is broken in the U.S.,” he said.
“We have built an alternative payback platform that is very consumer friendly.
“It allows consumers to budget for purchases with four interest-free instalments over six weeks,” Paradis said.
Sezzle has 226,000 active users in the US and almost 3000 merchants on its books. Most are online small- to medium-sized businesses. In February its underlying monthly sales were $US9.6m.
After listing on the ASX Sezzle intends recruiting larger retailers as well as offering in-store sales at checkout.
According to Sezzle, it has no plans to operate in Australia at this point, despite having 150 local merchants, but did not rule out expanding onto the market in the future.
Mr Paradis said Australia was years ahead of the US when it came to payments technology, with tap-and-go tech still not mainstream there.
“As a market, the US is probably two to three years behind Australia, and really that’s from an overall payments standpoint,” he was quoted as saying.
“We’re seeing a lot of traction. The whole space is wild fire … we’re doing well, Afterpay is doing well there, and there’s another competitor now called Quad Pay.
Buy-now-pay-later has stuck a seemingly welcome chord with consumers and with investors.
Afterpay released its prospectus with nearly 40,000 users on its books as well as more than 100 retail merchants and was doing $2.8m in monthly sales.
Mr Wu was quoted as saying that Sezzle’s listing on the ASX made sense as investors already understood the operating model but that it was unlikely apps like Sezzle wold threaten Afterpay in local markets.
“It’s unlikely to threaten Afterpay, at least in Australia, given how well established they are in the market,” he said.
Wu said that the market was exciting at the moment because of limited regulations. However, industry observers say the possibility is growing that stricter regulations may be legislated to protect consumers and investors in the future.