If LIBOR rose with rates it would hurt transaction margins.In turn, if BNPL players had to extend consumers' credit periods under the COVID-19 "Team Australia" principle of debt leniency, costs to fund receivables increase via higher interest and longer durations. It's going to continue to take hold. Three-month (US dollar) LIBOR is now 76 basis points and a typical 30-day LIBOR rate 50 basis points.The BNPL players have benefited from interest savings on warehouse balances as LIBOR tumbled in line with global rates. Buy now, pay later (BNPL) platform Sezzle (ASX:SZL) reckons it’s firmly on track to hit US$1bn (~$1.4bn) ... Shares in Sezzle edged higher in morning trade to around $8, as the stock holds it gains after climbing by around 1,900 per cent from its March lows of less than 40c. While easing during lunchtime trade, Sezzle shares were at one stage up 54% to peak at $7.50 having started the day at $5.06. PBC signifies that a company not only delivers shareholder profit but also creates a positive impact on the community at large.Earlier this week, the company reported it had seen active users grow to 1.48 million users at June 30, up 28% between the March and June quarters.Afterpay raised $800 million this week, and several other player in the sector are also on the hunt for cash.Afterpay (ASX: APT) has another record day with its shares finishing up more than 11% to $73.54, just 2 days after the raise at $61.75 a share.Co-founders Anthony Eisen and Nicholas Molnar both 2.05 million shares each – 10% of their stake – as part of the raise, meaning the two billionaires have missed out on adding another $24 million each to their wealth.He was previously Associate Editor of Business Insider Australia and before that a full-time restaurant critic, editor of The Good Food Guide, and a newspaper proprietor, having spent more than 25 years in journalism and publishing.He chaired industry lobby group Australian Business Ltd's (now the NSW Business Chamber) environment committee during the Kyoto agreement era.Daily startup news and insights, delivered to your inbox. In the US it's unregulated, so the oligopoly have their run at it," Youakim explains.A typical Visa processing fee in the US is 3 per cent. Aussie investors, traders and analysts, have gone gaga for this new crop of fintech superstars. Tom Richardson ... the BNPL sector has little moat as there's little to stop new competitors offering retailers lower fees to win market share. The start-up launched its lending platform in 2017 in the US. AMP shares have biggest gain in a year on $544 million capital return plans. Customers love it. Youakim says the US BNPL market can profitably support multiple players.
"When we launched in the US we looked at what happened in Australia and noticed the biggest difference in the unit economics between the two countries was card processing rates," Youakim says.BNPL players charge consumers' cards themselves, rather than the retailer, and pass on the cost as part of a bundled fee to retailers for different services provided.In the US, the fee charged by card issuers (normally Visa or Mastercard ) to process a transaction is far higher than in Australia. 2019 is without a doubt the year of ‘buy now, pay later’ — or BNPL. This reduces return on invested capital as a measure of profitability.The third key variable transaction cost driving how profitable the BNPL business model is at scale is bad debts as a percentage of sales.In a bear scenario it's possible US margins turn negative on merchant fee pressure, increased bad debts, funding costs, or payment-processing charges.Broker UBS says sell Afterpay because margin pressure will hurt it in FY21.
[The fee] runs at 0.6- 0.7 per cent. But that is only half the story.The ASX is down as Telstra offsets big gains in AMP, Treasury Wine Estates and Premier Investment. For investors, the growth in the United States buy now, pay later (BNPL) sector makes Australia look small beer.Around $1 billion of Afterpay's $2.6 billion in total sales came from the US in the March quarter, Over the year to March 31, Sezzle more than quadrupled North American merchants and consumers using its services to 12,715 and 1.15 million respectively.
They're starting to realise they need a solution," says Youakim.Sezzle CEO and founder Charlie Youakim with chief revenue officer Paul Paradis. In Sezzle’s case, they hit 35 cents before rising more than 1,000% before the financial year ended to just over $4.But unlike Afterpay’s modest EBITDA prediction of $20-25 million for FY20, Sezzle is not yet in the black having posted an EBITDA of -US$10.7 million in FY19.One way Sezzle differentiates itself from other BNPLs is it’s a public benefit corporation (PBC) having announced its new status last month. Fintech Sezzle’s share price went beserk – so the ASX hit the pause buttonFintech Sezzle’s share price went beserk – so the ASX hit the pause buttonSZL) skyrocketing more than 50% in Thursday morning trade before the ASX handed the stock a speeding ticket and placed it in a trading halt.Openpay posts record monthly growth just ahead of releasing its annual resultsHow the ‘new normal’ will change company culture for goodStartup Daily TV: Cynch Security is helping smaller companies get cyber fit as cybercrime growsAustralia’s cybersecurity strategy is more about policing and intelligence than preparing business against attacksICYMI: Startup Daily TV, Tuesday – lean startups, proptech, going carbon neutral, and helping businesses thriveExpert360 co-founder Bridget Loudon is joining the Telstra boardAgtech startup Trust Provenance is using blockchain to track food from paddock to plateHere’s what startup founders and investors are saying about the future of VC funding after a massive start to 2020Playing the COVID-19 blame game comes at a cost – the govenment’s credibilityNSW school cluster grows. Retailers are taking notice.
Like fellow ASX-listed buy now, pay later Afterpay, Sezzle shares have been on a … Crunch time for Sezzle in US buy now, pay later market. That's number one," he says. July's Labour force data ahead.
Reports are emerging that the company is looking to raise $80 million. It's still early days.