You are using an older browser version. Please use a supported version for the best MSN experience.

Openpay joins fintech retail race

AAP logoAAP 18/10/2016 Petrina Berry

New fintech player Openpay has entered the digital "buy now, pay later" marketplace with an app-based facility that gives shoppers instant access to credit.

The digitalisation of instant loans with no interest - allowing shoppers to buy items now and pay later - is a growing market, Openpay chief executive Simon Scalzo says.

"Buy now, pay later payment options have been around for some time but in the fintech space it is very new," he told AAP.

"Retail is a $300 billion market in Australia.

"There is only a small number of fintech companies touching the market and that's why it is lucrative.

"Even if you capture one per cent of that market, you are flying."

Openpay has plans to join listed competitors Afterpay and zipMoney on the Australian share market next year, following an initial private capital raising of $8 million to $10 million currently under way.

Anaconda, Shaver Shop, BMW dealerships and dental practices are among more than 200 retailers and services that use Openpay now and Mr Scalzo said the company also has retail clients in New Zealand, an $80 billion market.

Openpay has about 40,000 customers.

Its credit program allows them to borrow up to $10,000 to buy goods or services with terms of up to 24 months.

Payments are staggered over time with no interest, however payment terms longer than two and half months attract an administration fee, while those who fail to pay on time are hit with a flat $6 fee.

Mr Scalzo said the business' primary revenue comes from retailers, with Openpay getting a percentage of every sale.

"In this system, you take home all the goods then and there, and the retailer gets paid the entire amount the next day and they don't have to chase up repayments," he said.

Financial services rating agency Canstar said Openpay and similar services are convenient but consumers needed to be careful to not overspend.

Canstar's general manager of wealth, Josh Callaghan, said Australia has one of the highest levels of consumer credit per capita in the developed world and the digitalisation of payment options will only add to that trend.

"Buy now, pay later services are having similar levels of growth as pay day lending and we are seeing dangerous levels of consumer credit out there," he said.

"While they deliver a fantastic interface and usability for consumers, people need to remember that the main reason they exist is so the merchant can get the sale earlier rather then wait for someone to save for that $2,000 guitar."

Mr Scalzo said Openpay conducts instant credit checks on consumers who borrow large amounts to ensure they can afford the loan.

Fintech companies say they are popular because they provide instant small loan approvals and customers can often sync their repayments with pay day.

The other major advantage they spruik is that they do not charge interest, unlike interest free credit cards which can charge high interest rates once an interest-free period lapses.

image beaconimage beaconimage beacon