Why an Australian instant credit firm wanted U.S. card experts for its local launch

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Australia-based Openpay, the latest firm to enter the U.S.’s booming buy now, pay later (BNPL) instant-credit market, has hired a team clearly braced for heavier competition and regulation ahead.

Openpay selected as its U.S. CEO longtime Deloitte payments consultant Brian Shniderman. It also chose Gary Stein, who was recently the Consumer Financial Protection Bureau’s deputy assistant director for consumer credit payments and deposits, to be Openpay's U.S. chief product and compliance officer.

Troy Carrothers, the former general manager of Kohl’s private-label credit card portfolio, is Openpay’s U.S. corporate adviser as the company plans to go live with a major merchant in the first half of 2021.

The U.S. BNPL market has drawn many new entrants in the last couple of years, with Denmark's ViaBill recently entering alongside startups and established players like Affirm — which is eyeing an IPO that could reach $10 billion — PayPal, Afterpay, Zip, Klarna, Splitit, Sezzle and Uplift.

Brian Shniderman, U.S. CEO of Openpay

Openpay plans to set itself apart by working with merchants to target consumers buying higher-ticket purchases, said Shniderman, a 14-year Deloitte veteran who rose to become a principal and the U.S. and global cross-industry payments leader at the consulting firm.

“We see a lot of white space — areas where consumers aren’t being served by existing lenders — and a lot of opportunity in verticals that haven’t been tapped yet for BNPL,” Shniderman said.

Openpay charges no interest or fees, and instead earns its revenue from merchants.

It’s no coincidence Openpay recruited a financial services regulations expert for its U.S. launch. Though U.S. and U.K. regulators haven’t honed in on BNPL programs yet, Britain's consumer advocacy groups are pushing for full regulation of the sector.

“We've got an expert from the CFPB in with us because transparency around instant financing is becoming a big issue, and a lot of merchants I've spoken to are concerned about the deals they’ve gotten into. Many BNPL providers say their platforms don’t charge interest but that’s not necessarily true if you look closer,” Shniderman said.

Openpay, which launched in Australia in 2013 and expanded to New Zealand and the U.K., uses a combination of traditional and alternative data to get a holistic view of a prospective buyer's financial situation when approving a purchase, according to Shniderman.

“Openpay will look at U.S. customers’ finances in real time and give them fair, reasonable and flexible alternatives to traditional credit cards and older BNPL plans,” he said.

While many BNPL providers initially targeted younger, unbanked and underbanked consumers for lower-ticket purchases like apparel and shoes, Openpay is going after a more mature group of buyers seeking more costly items, Shniderman said.

“Our main audience is financially savvy consumers who need help managing their cash flow,” he said.

Examples include people in need of major household or car repairs, or families seeking financing for dental, orthodontic or other health care expenses including veterinarian services.

Openpay in the U.S. will extend loans for larger amounts over longer terms, Shniderman said.

Millennials will also be a part of Openpay’s target audience.

“There’s a material group of millennials that doesn’t like credit cards, but there are many others that do — it’s difficult to generalize about such a large consumer segment,” Shniderman said.

In Australia, Openpay's repayment plans range from one to 24 months and Openpay's U.K. consumers typically pay off purchases in equal payments over several weeks, typically three to seven monthly installments, according to Openpay's website.

Openpay has not outlined instant-financing terms in the U.S., but Shniderman said the model is similar to Openpay's operations elsewhere. Openpay also will work with a major U.S. payments processor to facilitate merchant connections, Shniderman said.

Openpay is looking to add a loyalty element to its BNPL services in the U.S., though Shniderman didn’t provide details. “There’s no strong loyalty element now in the U.S. BNPL market, but there’s no reason there can’t be,” he said.

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