US-based Zebit Inc CDI (ASX: ZBT) listed last Monday to a lot of fanfare, finishing the week up by 10.9%. This was the latest company to enter the buy now, pay later (BNPL) market, but it won't be the last.
The Australian Financial Review reports that Limepay has tapped Ord Minnett in a $30 million pre-IPO funding round. If successful, Limepay won't be like any other ASX shares in the BNPL market.
Yet another ASX buy now, pay later share?
Zebit is not in the crowded Australian market. Like Sezzle Inc (ASX: SZL), it is focused on the giant US retail markets. However, its business model is hard to differentiate from many others in this space. This comes shortly after the listing of New Zealand BNPL company Laybuy Holdings Ltd (ASX: LBY). which has seen its share price fall by 27% since the day it listed.
The entrance of payments giant Paypal Holdings Inc (NASDAQ: PYPL) into the BNPL space had an immediate chilling effect on ASX BNPL share prices. Nonetheless, this is the market that Limepay intends to enter with a different, potentially disruptive business model.
Limepay's technology is designed to address one of the core issues merchants have with BNPL companies. That is, both the large ASX BNPL shares, Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P), have websites filled with merchants a consumer can buy from. This means they take customers as part of a sale in one store, and target them with competitors' products. In the process, they own the relationship with the consumer, not the original vendor.
In contrast, the Limepay approach allows companies to build their own Afterpay-style functionality. Dan Peters, a former Google Australia executive, is the Limepay chief revenue officer. He recently commented:
The concern from merchants with the likes of Afterpay etc is that they're essentially marketplaces. They acquire all of these customers from merchants and then they remarket to those customers. It's like a leaky bucket taking customers away.
Another tech luminary on the company's board supporting CEO Tim Dwyer is the former chief growth officer of Zip Co, Andy Mitchell. The money raised by Limepay would also be used to boost its management team. In addition, as the company moves towards listing on the ASX, the funds would also be used for sales, marketing and product expansion.
Foolish takeaway
While there are already many ASX shares in the BNPL space, Limepay brings an entirely new business model. It had 82 live merchants using its platform as of September this year, including a globe-spanning partnership with Accor. It will be interesting to watch if the company can actually disrupt this young fintech sector.
