As BeforePay bags $9 million and Affirm lists in the US, 2021 shows the BNPL trend is still strong

Beforepay-alternative-credit-boom

Vocus Communications founder and Beforepay lead investor James Spenceley, and Beforepay co-founder Tarek Ayoub. Source: supplied.

We’re barely two weeks into 2021 and already we’re fielding a flurry of news in the buy-now-pay-later (BNPL) sector, including everything from international listings to local raises.

This week, pay-on-demand fintech BeforePay secure another $9 million in funding, as it gears up for an IPO in 2021.

In the US, San Francisco-based BNPL provider Affirm listed on the Nasdaq, surging 85% on debut and giving the tech company a market cap of more than US$22 billion.

That’s been widely reported as indicative of increasing demand for BNPL in the US and internationally.

And in Australia, already arguably one foot ahead in the trend, it’s driven yet another spike in Afterpay’s share price, pushing it to a new record high of $128.45.

For context, Afterpay shares went gangbusters in 2020, rising from a low of about $8 in March to over $100 in October — a record high at the time.

Last year also saw upcoming player PayRight list on the ASX, while white-label BNPL solution provider Limepay bagged $21 million in December last year.

BeforePay’s funding news comes just a year after the startup launched, and mere months after it bagged $4 million in November last year.

Founder Tarek Ayoub sees BeforePay as a kind of Afterpay or Zip service, but for everything consumers aren’t able to use those services for.

Syncing with users’ bank accounts, it allows customers to access up to $200 as an advance to their paycheck.

When they’re wages are paid, the money is automatically repaid, plus a 5% fee.

But, the startup hasn’t exactly gained universal praise, with critics questioning whether its service is ethical and whether its services are fair.

Last year, this led to a wider debate on this sector as a whole. While there’s certainly demand for products like this, the jury is still out as to whether these businesses have their customers’ best interests at heart.

Of course, this all comes while the Australian Finance Industry Association is working on a code of conduct, due for release next year, that would see BNPL and other credit providers self-regulate.

So, while the BNPL trend isn’t showing any signs of showing in 2021 thus far, it still has reputational hurdles to overcome.

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