The Laybuy Holdings Ltd (ASX: LBY) share price is up slightly today following the announcement of its tap to pay product.
Another buy now, pay later share?
Yes, Laybuy is the newest buy now, pay later (BNPL) to hit the ASX. The company had an initial public offering (IPO) offer price of $1.41 per share and an indicative market capitalisation of $246 million at the offer price. It floated on 7 September and opened around the $2.00 mark. However, the market may not be convinced of its growth potential and the Laybuy share price has since been sold down to around the offer price.
Laybuy provides a payment platform that enables customers to split the payment of purchases, both online and instore, across 6 weekly interest-free instalments. The company considers itself a dominant BNPL provider in the New Zealand market, and views its key competitors in that market as Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P). It also operates in the highly competitive Australian market and relatively young UK market.
Positive quarterly update
The company provided a positive update for the second quarter FY21 that highlighted the business’ continued momentum. Its gross merchandise value (GMV) was up 162% on the prior corresponding period to NZ$127.1 million. Active merchants increased 48% to 6,323 and active customers increased 16.7% quarter on quarter to 568,000. From a profitability perspective, its net transaction margin continues to improve, increasing 432% to 2.3% of GMV for 2Q from 0.5% in 1Q21.
Launch of tap to pay digital BNPL card in Australia
Today, Laybuy launched its globally unique and innovative digital BNPL Mastercard Inc (NYSE:MA) in Australia. The product allows customers to purchase goods and services in-store using Laybuy with a simple tap of their smartphone. The Laybuy share price is trading at $1.47, up 2.8%, at the time of writing.
Laybuy managing director Gary Rohloff said the digital card enabled consumers to enjoy the benefits of Laybuy, while making use of Mastercard’s simple and secure contactless payment technology. He described the card as a win-win for both shoppers and retailers as it allowed both parties to skip a number of steps usually required when making purchases with BNPL.
Unfortunately for Laybuy, these products have already been released to the market by its competitors, Afterpay and Zip.
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Returns as of 6th October 2020
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Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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