Another buy now pay later company exits New Zealand

The rise of online shopping boosted buy now pay later businesses during the pandemic. Photo / File

Buy now pay later operator Genoapay is to stop offering its service in New Zealand from April - the second buy now pay later company to pull out of the country in the last year.

Genoapay told its customers on Friday that it would exit New Zealand on April 11.

“Thank you for being a customer, we’ve loved helping you shop for life’s moments big and small, but we had to make the difficult decision to stop offering this service,” the firm said.

Genopay had made to decision to close its BNPL offering in New Zealand and Australia after completing an extensive strategic review of the service, the company said in a statement.

“BNPL has achieved its aim by attracting more than half a million customers to Latitude but is an immaterial part of the business, representing approximately 0.3 per cent of receivables.

“Given this, and as a consequence of the uncertainty surrounding the future regulatory environment, Latitude believes now is the right time to exit the sector.

“Latitude remains fully supportive of regulating BNPL as a credit product.”

Genoapay’s move follows that of Humm which announced in August that it would close down its Kiwi operation on September 25.

Genoapay is owned by ASX-listed Lattitude Financial Services. On February 17 the company announced a full year net profit after tax of A$36.3 million for the year to December 31 77 per cent down on the A$160.3 million in made in the prior financial year.

Its total operating income fell from A$796.2m to A$712.2.8m after its interest expenses rose sharply over the year. Its cash net profit from continuing operations fell 23 per cent from A$200.1m to A$153.5m.

At the time managing director and CEO Ahmed Fahour said the result was reflective of a challenging market in 2022 with the continued impact of the pandemic, high inflation and added funding costs.

New Zealand’s Genoapay customers have been told they still need to make payments to pay off their debt.

“If you don’t you will incur late fees and it may impact your credit file.”

Customers can continue to make purchases up to April 11 but further purchases using the service would not be available after that date.

Genoapay launched in New Zealand in August 2016 and was founded by Shaun Quincey. It provided a no-interest payment service with payments split over 10 weeks for purchases up to $1000.

It was bought by Latitude in December 2018.

Buy now pay later businesses rose in popularity during Covid with consumers stuck at home and keen to undertake online shopping.

They grew quickly using the cheap financing available during the pandemic. But with the sharp rise in interest rates the pressure has come on to the sector to become profitable at the same time as multiple countries are looking to regulate the product.

Earlier this month receivers were appointed to troubled Australian buy-now-pay-later company Openpay, which has been operating in New Zealand since 2013.

Late last year the New Zealand Government announced it would bring buy now pay later under the Credit Contracts and Consumer Finance Act and introduce a cap, currently proposed at $600, over which the companies would be required to undertake affordability checks before giving the loans out.

Buy now pay later isn’t currently caught under the CCCFA because consumers don’t pay interest on it.

But those who are late making the payments or fail to pay off the item are hit by hefty fees and financial mentors have been concerned by some users getting caught in a debt cycle by the new payment products, which have seen a huge burst in popularity in recent years.