Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site.

Has the Openpay (ASX:OPY) share price entered buying territory?

The Openpay Group Ltd (ASX: OPY) share price has pulled back around 40% from its August high this year. Have shares now entered buying territory?

The Openpay Group Ltd (ASX: OPY) share price has pulled back around 40% from its August high this year. Have shares now entered buying territory?

Openpay is one of a growing list of buy now, pay later (BNPL) providers on the ASX. Some of Openpay’s larger merchants include Kogan.com Ltd (ASX: KGN) and Bunnings Warehouse, a subsidiary of Wesfarmers Ltd (ASX: WES).

OPY share price chart

Source: Rask Media OPY share price chart since listing

Openpay’s BNPL business model

Openpay allows customers to purchases products valued up to $20,000 from its merchant partners and spread the repayments across 2-24 months. This represents a higher purchase limit and longer repayment duration than many other BNPL providers such as Afterpay Ltd (ASX: APT) and Sezzle Inc (ASX: SZL).

Customers are required to make the first payment on the day of the purchase, with the rest paid in instalments on a weekly or fortnightly basis. Openpay does not charge ‘interest’ but may charge plan establishment, plan management redraw, default and referral fees.

Plan management and application fees vary by merchant. As an example, according to Openpay’s dedicated Bunnings webpage, for purchases under $1,000 customers pay a plan management fee of $0.50 each time they make a repayment. For purchases above $1,000, an application fee of $25 and an ongoing management fee of $2.50 is charged.

Openpay’s terms and conditions state a default fee of $9.50 is payable if a payment is not made on the due date. A further referral fee of $19.50 is also payable if an instalment is still unpaid eight days later.

Merchants receive the value of the purchases less a fee calculated as a percentage of the transaction value. Openpay does not openly state this percentage, however, merchant fees represented around 4.3% of FY20 total transaction value.

Openpay’s point of difference

In addition to Openpay’s BNPL offering, the company also offers a business-to-business (B2B) software-as-a-service (SaaS) platform.

The B2B platform offers businesses an end-to-end solution for the digitisation and management of business customer accounts. Features include account application and setup, transacting, statements and invoices, and account reconciliation.

In February this year, Openpay signed Woolworths Group Ltd (ASX: WOW) onto its B2B platform. Openpay CEO Michael Eidel commented: “We’re excited to launch Openpay For Business with an Australian business as iconic as Woolworths. This new SaaS product represents an important differentiator for us. It does not require support from Openpay’s balance sheet and is expected to deliver diversified revenue streams for the Company.”

Openpay has flagged its intention to roll out the platform within Australia and globally.

Recent trading update

At Openpay’s November annual general meeting (AGM), the company provided updates on how its BNPL and B2B offerings are tracking.

Openpay advised that compared to the prior year, active plans surged 233% to 1.15 million, active customers jumped 143% to 390,000 and active merchants lifted 34% to 2,346.

In October alone, total transaction value (TTV) reached $25.8 million, representing a 101% increase compared to the prior corresponding period.

Openpay was pleased to record strong underlying metrics in the first quarter of FY21, including net transaction margin of 2.2%, net bad debt rate of 1.6% of TTV, and a “market-leading” gross revenue yield of 9.1%.

Openpay also highlighted strong growth in its UK BNPL offering. To date, 50 UK retailers have agreed to offer Openpay’s payment solution at the checkout, including large retailers JD Sport and The Hut Group. As at October 2020, Openpay had 337,000 active plans and 162,000 active customers in the UK.

Openpay also advised its B2B platform went live with Woolworths in September. This marked the first revenues generated by the product. Other leading retailers have reportedly expressed interest in the B2B solution.

Is the Openpay share price a buy?

While the Openpay share price is well off its highs, I am unsure if Openpay is a business I would want to own shares in. Although the company’s BNPL product is slightly different from those of its competitors, it is not unique.

Additionally, some of the recent customer reviews for Openpay I have seen on Trustpilot and ProductReview are quite negative. In fact, many are warning others to stay away from it.

I do think Openpay’s B2B platform sounds promising, however, just one customer (Woolworths) has signed on to date. I would need to see a turnaround in customer feedback and growth in Openpay’s B2B customers before considering buying shares.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content