New Zealand's buy now pay later market has become a crowded space to play in over the last 18 months but a new entrant from Australia believes there is still a niche for it that could be worth up to $100 million a year.
Payright, founded by Australian brothers Piers and Myles Redward in 2016, has launched in New Zealand targeting merchants in the healthcare, photography and home improvement space including solar panels.
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Myles Redward said its point of difference is that while it does offer the typical four-week payment spread, it also offers to spread payments up to 60 months allowing people to borrow up to $20,000 with no interest.
"Some of the existing players typically cap out at $1000 [in lending]."
It also has a different merchant mix. Rather than fast fashion retailers it has direct to the public sales businesses Nutrimetrics and Amway on its books.
"We feel it is quite a varied solution."
Buy now pay later offers consumers the ability to purchase an item and get it in the hand straight away while paying it off over a set timeframe.
The schemes have proved highly popular with millennial shoppers who don't want to use credit cards but still want the ability to space their payments.
New Zealand's main players include ASX-listed Afterpay Touch, PartPay, Laybuy and Oxipay.
In late August Zip Co, also listed on the ASX and Australia's second largest provider behind Afterpay, bought PartPay in a deal worth up to $65.8m.
Research by New Zealand Post on the phenomenon this year found the deferred payments schemes had experienced a "staggering rise" and are set to keep growing.
It revealed that more than 228,000 Kiwis had already signed up to a buy now, pay later scheme, and they are particularly popular with female millennials.
More than one in 10 online shoppers had used such a scheme. 70 per cent of the users were female and 80 per cent were under 45 years old.
Myles Redward said while there was already a number of providers in New Zealand it was much more competitive at the low ticket price end - people buying $100 or $200 worth of items. Its average transaction size is $2500.
"Rather than having to compete it sits alongside the existing buy now pay later schemes."
He believes there is opportunity for it to grow to $100m in revenue in New Zealand.
"The whole point of difference is there is no interest charge, ever."
But there is a big catch in terms of fees. Its website shows Payright charges a range of fees from an establishment fee ($59.90), a repayment fee charged every time a payment is made of $2.95 and a monthly account fee of $3.50.
Then there are the fees charged if a person defaults on the payments up to $12.95 and a $29.95 enforcement fee for debt collection.
With a higher amount borrowed and a longer timeframe to pay off the purchase there could be potential for more defaults.
But Myles Redward insists that's not the case.
"We don't see that." He says in Australia two thirds of its customer base is over 35 compared with the opposite for smaller purchase buy now pay later.
"We do put applicants through an extensive credit process. Our default rates are very low and well within the industry average," he said.
Retailers have widely adopted the new payment method as a way of boosting sales but it is costly - up to 5 per cent of the sale goes to the payment provider.
Myles Redward said its merchant fees varied but with higher lending it could be as low as 2 per cent.
"We haven't found that is a deterrent for merchants."
Piers Redward said it saw appetite growing and continuing to grow. He estimated the Australian market could be worth as much as $300 billion to $400b.
"And that is just retail alone."
In Australia it has tapped into the solar panel market as well as other renovation businesses like curtain and blind makers and fencing and decking specialists.
Initially it will operate using it staff in Australian but the intention was to growth and set up an office in New Zealand, he said.