Latitude (ASX:LFS) boss warns many ASX BNPL companies “will go out of business”

Is the future dire for Australia’s listed BNPL companies?

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A stressed businessman in a suit shirt and trousers sits next to his briefcase with his head in his hands while the ASX boards behind him show BNPL shares crashing

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The CEO of buy now, pay later (BNPL) provider Latitude Group Holdings Ltd (ASX: LFS), Ahmed Fahour has told the media that many of his company’s ASX peers won’t survive through to 2024.

His comments, published yesterday afternoon, preceded the sector’s major downturn on Friday.

At the time of writing, the Latitude share price has seemingly dodged the worst of the carnage. It has fallen just 0.79% to trade at $1.89.

On the other end of the cacophony, the Afterpay Ltd (ASX: APT) share price has tumbled by 7.32% today. Its ASX peer Zip Co Ltd (ASX: Z1P) has fallen 5.6%. Sezzle Inc‘s (ASX: SZL) stock is also in the red, having slid 9.29%.

For context, the S&P/ASX 200 Index (ASX: XJO) is up 0.28% right now.

Let’s take a closer look at Fahour’s prediction for the ASX BNPL sector.

Will the ASX BNPL sector survive?

According to Latitude’s boss, the company will soon be one of only a few ASX-listed BNPL providers, with many going defunct in the near term.

Right now, 15 companies listed on the ASX are involved in the BNPL industry. That’s not including the likes of banking heavyweight Commonwealth Bank of Australia (ASX: CBA) and its StepPay offering.

Fahour told The Australian that Latitude will be among the survivors due to its 30 years of experience as a payment services provider.

The publication quoted him as saying:

[I]n the next 12-18 months, a lot of [ASX BNPL companies] will go out of business because the market won’t keep funding their losses.

The comments come days after BNPL industry expert Grant Halverson said the sector’s participants might be hard-pressed for capital in 2022.

Halverson noted a race to expand into the United States might see BNPL providers taking on more bad debts. This could hinder their ability to access finance facilities, he said.

Latitude’s offering is different to that of many BNPL companies. Its LatitudePay allows customers to pay in 10 instalments, rather than the industry norm of 4. It also offers LatitudePay+ for purchases of up to $5,000.

In addition to Fahour’s media appearance, Latitude’s latest international expansion may be buoying its share price, too.

Today, Latitude announced its move into Singapore in partnership with Harvey Norman Holdings Limited (ASX: HVN).

Its BNPL service will go live in 3 of Harvey Norman’s 12 Singapore stores this month.

The company is also moving into “bigger ticket BNPL” next year to differentiate itself from the broader Asian BNPL market.

Fahour commented on the company’s entry into Asia, saying:

Singapore is a major Asian commercial hub and a logical entry market for Latitude, boasting a vibrant retail sector with sophisticated consumers who are quick to adapt to digital innovation.

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