Australian BNPL firm Openpay collapses

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Australia-based Openpay has gone into receivership, which will see the buy now, pay later firm designating trustees to oversee its assets to help repay creditors. This is the first listed company of its kind to collapse.

It has also laid off 80 of its 140 employees, the Australian Financial Review reported.

Partners at restructuring company McGrathNicol will act as receivers and will “work closely” with Openpay’s staff, merchants, and customers to “determine the appropriate strategy for the business,” the BNPL firm said in a letter to investors.

Openpay suspended trading last week, with shares dipping to A$0.20 (US$0.14) before it closed. Its stock previously hit US$3.28 at its peak in August 2020.

The trading halt has caused visible distrust in the sector, with fellow listed Australian players Zip and Sezzle’s shares trading lower following the fallout.

New Openpay transactions have also been frozen, though users will still be charged for purchases that have already been made.

“At this time, customers will no longer be able to use the Openpay platform for new purchases, but are still required to pay any outstanding balances in accordance with their existing agreements,” the firm declared.

Additionally, non-executive director Yaniv Meydan has stepped down from his role at Openpay.

Rising interest rates, and futile attempts at breaking into the UK and the US could have been a factor in Openpay’s closure, according to FinExtra.

Just a week earlier, the company announced it had logged a record quarterly revenue of US$7.1 million and reached a peak of 374,000 active customers for the second quarter of fiscal year 2023.

Australia is one of the most mature BNPL markets globally, while Southeast Asia picked up the trend more recently. Doubts about the business model could put the whole sector at risk.

Currency converted from Australian dollars to US dollars: US$1 = A$1.43.

See also: BNPL sours in Australia, but will SEA players buck the trend?