QuickFee Ltd (ASX: QFE) has announced an interest fee product with Splitit Ltd (ASX: SPT).
The Quickfee – Splitit partnership
Quickfee is going to launch an additional instalment product in the US and Australia which will allow Quickfee to address a much greater share of the professional services market.
The company estimates this will increase the target market by 650,000 accounting and law firms in the US alone. These new targets are smaller firms that normally fall outside of its credit risk framework.
How will it work? The professional services firm sends the client an invoice, the client choose the interest free instalment payment option and enters their credit card details to pay in four instalments. The Splitit system takes the first instalment and pre-authorises the remaining instalments. No applications are required as no new credit is being offered to clients.
Professional services firms will pay Quickfee’s charges, giving their clients access to a convenient online payment plans and making it easier for potential clients to access legal, accounting or financial advice.
Quickfee said that the new product is consistent with its low risk credit profile given Splitit’s credit card pre-authorisation technology.
Quickfee said the total value of the opportunity can’t be calculated at this stage.
Bruce Coombes, CEO of Quickfee, said: “We are hugely excited by the new partnership with Splitit. Having already achieved strong acceptance amongst professional services firms with our online payment portal and existing lending solutions, this new interest free product allows Quickfee to capture a significantly greater share of the professional services market by providing payment plans to clients of smaller firms, by far the largest part of the market, that we would not normally service.”
How is Quickfee funding this?
Quickfee announced that it is launching a capital raising for $15 million and a share purchase plan for another $2.5 million to fund the rollout of this interest free product and accelerate growth.
The funds raised will be largely used to fund the expected increased lending. The money will also be used to increase the customer acquisition team, mostly in the US, to fund the “very significant anticipated growth” of the receivables book with Splitit and also fund the R&D for future product releases.
The offer will be priced at $0.58 per share, a discount of around 10%.
Summary
Quickfee is clearly excited by the opportunity, or it wouldn’t be taking on the partnership. It opens up a much bigger market, so it could be very good for Quickfee if it goes well.
Quickfee shares are currently in a trading halt, though CommSec suggests the Quickfee share price could jump over 10% when they do trade. The Splitit share price is up over 2%.
For existing shareholders, it could be worth taking part in the capital raising as it’s a nice discount and it could open up a lot more growth for the company. However, there are other ASX growth shares that could be better ideas like Pushpay Holdings Ltd (ASX: PPH) which may have less risk.
