Newly-listed neobank Douugh (ASX: DOU) has entered into a strategic partnership with Humm Group (ASX: HUM) to launch an integrated, interest-free buy now pay later (BNPL) offering for the United States market.
Under the terms of the joint venture, Humm (which officially rebranded from Flexigroup (ASX: FXL) yesterday) will “power” the solution via its BNPL technology platform to manage a line of credit for eligible customers of up to $1,000.
The money will be offered through a dedicated “Credit Jar” and virtual Mastercard on Douugh’s banking app and be repaid by customers in six automatic weekly instalments.
The joint venture is subject to conditions including: the completion of due diligence by both parties; the finalising of a formal binding agreement setting out full terms; the completion of a licensing agreement with Douugh’s US banking partner; and confirmation that Douugh’s platform is fully operational.
Douugh chief executive officer Andy Taylor said the company’s data showed the need for an interest-free product to help customers consolidate their credit card debt and “smooth out” their cashflow.
The new product is designed to be used as a safety net for unexpected expenses, rather than a way to impulse buy products.
“Credit Jar is very different to traditional point-of-sale BNPL offerings and represents a step change in the model because we are treating it as a credit product, which is what we strongly believe it should be,” he said.
“Our solution will help boost a customer’s credit score when repaid on time, and will only be made available to people who can easily service it as part of their everyday budget via our responsible lending criteria.”
US market entry
Today’s partnership will mark Humm’s first foray into the US market.
Humm chief executive Rebecca James said the $600 million BNPL company is keen to take its local learnings onto the global stage.
“Through this proposed joint venture with Douugh, we will take our first steps into the US as a company,” she said.
“It will demonstrate how [we] can create innovative and novel ways to take our world-class technology and capabilities to expand our relevance and distribution.”
Douugh also announced today it had received firm commitments for a $12 million capital raising, including a $2.5 million cornerstone investment by Humm through its newly-formed partnership division known as Humm Ventures.
Funds will focus on accelerating customer acquisitions following the launch of the Douugh app and be used for the company’s own research and development, marketing and growth activities.
The capital raising was managed by Canaccord Genuity.