Buy Now Pay Later sector continues to flourish as Openpay secures strategic partnership with 1st Group
Openpay’s Buy Now Pay Later offering will be rolled out via the MyHealth1st network at 60 sites over the next six months.
In a joint announcement, payments facilitator Openpay (ASX: OPY) and digital health company 1st Group (ASX: 1ST) have unveiled a three-year strategic partnership including a new revenue-sharing agreement.
According to 1st Group, the agreement paves the way for Openpay’s Buy Now Pay Later (BNPL) payment option to be rolled out across its MyHealth1st platform used by practices and healthcare providers.
1st Group currently operates Australia’s leading health services portal, MyHealth1st.com.au, Australia’s online pet service portal PetYeti.com.au and corporate and government solutions platform GoBookings.com.
Under the partnership, Openpay will market the MyHealth1st platform to existing healthcare providers within its merchant network as part of a broader growth in BNPL payment options that are quickly going beyond the traditional consumer spending the company has typically been associated with.
BNPL is usually used by consumers when shopping for various consumer items including electronics and consumable goods, but the payment method is quickly being adopted within more critical niches such as pharmacies, optometrists, dentists and veterinary practices – the very markets in which 1st Group is a leader.
Phased rollout
The three-year agreement with Openpay will involve a phased rollout of its BNPL offering across the MyHealth1st network, with an initial rollout planned across approximately 60 sites over the next six months and could be further expanded subject to the performance of the initial phase, the company said.
Under the terms of the agreement, Openpay will market the MyHealth1st platform to existing healthcare practices and will earn an as-yet-undisclosed fee for each referral.
To kick off the partnership, 1st Group said Openpay will pay for all platform functionality to be established and the two companies plan to share revenues generated from new customer generation.
Openpay performance
In parallel to announcing a partnership with 1st Group, Openpay also published market performance figures for the 2020 second quarter (the last quarter of the 2020 financial year).
During the quarter, Openpay unleashed a concerted flurry of special promotions, underpinned by further debt and equity funding which was secured over the past three months.
The company said it achieved record growth across all leading indicators including a 22% increase in active plans, a 141% increase in active customers and a 52% jump in active merchants.
According to Openpay chief executive officer Michael Eidel, the broad-based improvement in all areas of its revenue-generation signals a “period of historic growth”, made even more impressive when set against a backdrop of extreme global market volatility created by the COVID-19 pandemic.
“We acted quickly to ensure the continued safety of our people, merchants and customers while providing the flexibility our customers needed to responsibly utilise our plans,” Mr Eidel said.
The company’s total transaction value – a standard industry-wide benchmark – grew to a record $192.8 million in the 2020 financial year, up 98.2% compared to 2019 and up 119% for the quarter.
Concerning healthcare, a niche most applicable to 1st Group, Openpay reported a 127% increase in active plans with its UK business unit OpenMay “contributing significantly” to overall performance.
Openpay said it finished the quarter with more than 319,000 active customers – 141% higher on a year-on-year basis, while active plans rose by 229%.
In the UK, Openpay also kicked off implementing a major agreement with JD Sports in May, with initial trading said to be “well above expectations”.
“As more consumers sought better ways to structure purchases across their life needs, we saw a strong surge in new customers and plans. This was particularly evident in the UK, where our business more than doubled during the period as a result of our OpenMay promotions and the launch of major retailer, JD Sports,” Mr Eidel said.
”In recognition of this fact, we welcome the support from Global Growth Capital via our inaugural UK debt facility of £25 million to bolster our UK growth targets,” he added.