The Motley Fool

Should you invest in Afterpay and these other BNPL players?

Those bullish on the Afterpay Touch Group Ltd (ASX: APT) share price may have heard the noise in the buy-now pay-later industry. Zip Co Ltd (ASX: Z1P), Splitit Ltd (ASX: SPT) and now more recently, FlexiGroup Limited (ASX: FXL) have also gained a lot of traction in the Australian share market to date.

• Afterpay: Up 101% YTD to $24.98 at the time of writing.
• Splitit: Up 137% YTD to $0.90.
• Zip: Up 251.4% YTD to $3.83.
• FlexiGroup: Up 34% YTD to $1.81.

Each company below offers a buy-now pay-later that is interest-free.


• Allows users to pay for purchases over four instalments every fortnight interest-free.
• Pays merchants up front and taking on the consumer’s credit risk allowing it to charge higher fees of 4% of the product’s value.
• Average product transaction value is $150 which targets lower-end apparel, though more recently expanded into other industries like health and travel.

Net income for Afterpay shot up 91% to 116.1 million in its HY as it processed $2.3 billion of underlying sales. This is up 147% from the prior comparative period (pcp).

Its UK expansion is in full speed ahead on the back of strong market penetration in the US. It is, however, operating at a high 38.7x price-to-sales ratio. While this shows a high valuation, it shows strong investor confidence in Afterpay’s international success in anticipation of FY earnings.


• Splitit pays merchants monthly and requires consumers to have a valid debit/credit card.
• It offers longer payment terms from 2 to 36 months which can be selected by the customer, specialising in higher-value purchases around the $1,000 mark.
• Splitit charges just 1.5%, as they do not take on customer default risk like Afterpay.

Splitit had revenues of US$790,000 for FY 2018, significantly lower than Afterpay and Zip. It recently announced it will be raising $30 million of capital from institutional investors and $10 million from regular investors. The issue price will be $0.80.

This is a result of its explosive growth in merchant and user uptake in its post-IPO. The funds will be directed towards accelerating market share and current product offering.


• Similar to Afterpay, consumers are extended a line of credit and Zip harbours the default risk.
• Similar to Splitit, Zip allows users to choose their preferred payment schedule. It offers two products – Zip Money (under $1,000) and Zip Pay (over $1,000) – which compete with Afterpay and Splitit respectively.

In its March quarter, Zip’s revenue rose 20% on the previous quarter. It added 143,000 customers and brought its total to 1.2 million, supported by Zip’s NZ expansion.

The company is operating on a 21x price-to-sales ratio, much lower than that of Afterpay’s. It also has two competitive offerings that make the business stand out amongst BNPL players.


• humm allows users to make transactions with values between $1 – $30,000 interest-free over 2.5 to 60 months.

FlexiGroup is the original provider of BNPL services in Australia. However, it was pushed out of the market by the likes of Afterpay and Zip due to poor execution of its Certegy EziPay and OxiPay platforms.

Recently, its share price has been outperforming in the markets. This is due to its positive update on the performance of its new platform, humm, which combined the two existing legacy platforms. humm boasts a host of high-quality clients including Myer Holdings Ltd (ASX: MYR), JB Hi-Fi Limited (ASX: JBH) and Strandbags.

humm accounts for 17% of market share in the BNPL industry, with over 1 million customers shopping at over 13,000 seller locations and e-commerce platforms.

FlexiGroup is profitable and operates at a 10x PE ratio, much lower than Australia’s WAAAX stocks. Similarly, its price-to-sales ratio is just 2.71x, which seems a fair valuation in comparison to other BNPL competitors.

With the BNPL industry becoming saturated, perhaps this is the chance to take a look at this new, high-growth industry.

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Audrey Thehamihardja 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. The Motley Fool Australia has recommended FlexiGroup Limited. 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.