Openpay makes UK acquisition

John Kavanagh

Openpay is the latest BNPL provider to make a big push overseas, with its announcement yesterday that it will acquire United Kingdom BNPL company Payment Assist, which specialises in funding automotive servicing and repair.

Openpay said it has entered into a binding agreement to acquire 100 per cent of Payment Assist for £11.5 million upfront and £17 million on an earnout basis over the next couple of years.

The upfront consideration will be paid out of existing cash holdings. A scrip component of the earn-out payment is subject to shareholder approval.

Openpay has been operating in the UK since 2019. It said that on a pro forma basis the combined entity would have increased UK transaction value in calendar year 2020 from £43.6 million to £121.7 million and revenue from £2.4 million to £8.4 million.

This would make the UK Openpay’s biggest market. It said it will retain the Payment Assist brand.

The transaction will increase the group’s total active customer numbers 33 per cent to 706,000 and active merchant numbers 122 per cent to 8200.

The company also operates in the United States, launching its business there last December. In March it signed a product development and distribution agreement with Worldpay, a division of the global payments group Fidelity Information Services.

Under the terms of the agreement the parties will work together to offer payments products to US merchants and consumers.

Since it launched in 2013, Openpay has sought to differentiate its business from the standard “pay in four” model. Plans can be for payments between $50 and $20,000, with payments over periods from two to 24 months.

It has pursued the healthcare, automotive, home improvement and education verticals, which it says are less competitive than retail.

Openpay’s business model was ‘differentiated’ for an entirely different reason in March, when it was revealed that a death provision in its terms and conditions meant that customers would have been in default of their BNPL contracts if they died in an operating theatre or after they were discharged from hospital.

Under the condition, Openpay was entitled to claim immediate payment of late fees and outstanding balances from dead customers who has pre-authorised the company to draw funds from their accounts.

After the details of the death provision were made public the company dropped the controversial contract term.