Limepay: New buy-now, pay-later scheme here to disrupt Afterpay and Zip

While other BNPL players target consumers, Limepay is retailer-focused, allowing merchants to keep customers on their site and maintain their branding.

Limepay also offers payment in full upfront, as well as customisable instalment plans, allowing for retailers selling more expensive goods, like furniture or electronics, to increase the payment schedule from pay-in-four upwards.

It is designed to streamline the process for the consumer, who can link a credit or debit card, or use a digital wallet to access the service.

Limepay Chief Revenue Officer Dan Peters told Savings.com.au one of Limepay’s goals was to bring consumers closer together with their favourite brands, rather than bouncing them off to a third party.

“LimePay is basically the first enterprise payment platform or checkout that brings together a traditional payment gateway, like a BrainTree or a bank gateway, and the buy-now, pay-later into one seamless solution,” Mr Peters said.

“Instead of having to sign up for a third-party account or a third-party platform like an AfterPay or a Zip you're signing up with your favourite merchants directly.”

Need somewhere to store cash and earn interest? The table below features introductory savings accounts with some of the highest interest rates on the market.

Tim Dwyer, Limepay’s CEO, said that consumers using their existing card for Limepay meant it was a payment solution for everyone, not just the traditional Afterpay cohort.

“You're opening up much bigger audiences to these brands and then at the very same time capturing all the customer data information and building loyalty with a bigger audience too,” Mr Dwyer said.

“What we're looking to drive is how can an Afterpay customer that hits your site, how could you potentially own that customer as your own rather than that marketplace sucking them up, and that's now bringing the power back to brands.

“We’re now putting the power back to business which is a nice shift to be a part of.”

Mr Peters added that Limepay currently had about 30 retailers on board, with more in the pipeline to join.

How does Limepay make money?

Customers who miss a payment will be charged $5 but late fees are capped at $10.

In comparison, Afterpay has a late fee of $10 for the first offence and a further $7 if the payment isn’t made in within seven days. It’s late fees are capped at $68 for any purchase price or no more than 25% of the purchase price.

Mr Dwyer said Limepay takes a margin on all the volume that goes through its service, but this margin was dependent on whether the customer paid in four instalments or up-front.

“Overall, what's great, as a model is that we have more of a revenue stream outside of the pay-in-four, so it provides a competitive advantage to us in that we can subsidise some of the risks with the pay-in-four, to the revenue we're making on the pay-in-full, and we can pass that back to a business,” he said.

“So it's super powerful and it is a competitive model and it means that we're not biased towards a certain product, so we don't have to mark it a pay-in-four and potentially tap into territory where we’re essentially over-leveraging people because they can't afford these credit products, we're not biased towards one or the other.

“It's a good revenue model, not just from a monetary point of view, but also from a consumer point of view and a merchant point of view.”

Mr Dwyer added that consumers shopping for more expensive items would be required to undergo a credit check, but Limepay was flexible in this regard.

“If someone's on an edge case, then they can opt in to pay more upfront and pay smaller instalments so we're not over-leveraging them too much.”

How is a new BNPL provider coping in the COVID-19 era?

The outlook for retail in Australia appears to be bleak: recent Australian Bureau of Statistics figures for April showed a monthly decrease in retail trade of almost 18%, the largest drop ever recorded.

Even Afterpay, which has a stranglehold on the Australian BNPL market, was massively suffering, with the pandemic crushing its stock price from above $40 in February to $8 in March.

But Chinese technology giant Tencent’s almost $400 million investment in the company in May has seen its stock price shoot to almost $50 at the time of writing.

Limepay secured $6 million in funding to assist with its expansion plans in May from a range of investors.

Mr Peters said despite the poor retail figures, e-commerce was thriving, and this, coupled with the funding, meant Limepay was well placed for success.

“Obviously if retail suffers overall then that's a bad thing for payment gateways and payment providers like us, but I think what you'll see is the rebalancing of power across the channels,” Mr Peters said.

“Most retailers, frankly, have been struggling for a very long time but could have made these cuts and changes and dramatic kind of shifts a decade ago.

“I think you'll see a lot of incredible innovation out of this, which has been frankly long overdue.”