The CEO of payment instalment startup Splitit has warned other buy now, pay later companies against trying to take advantage of vulnerable customers during the COVID-19 crisis.
Brad Paterson said that companies that offer these customers lines of credit will end up losing customers in the future
“Companies who aren’t gouging or profiteering from this by giving credit to those who shouldn’t have it, they will do very well,” Paterson told The Age and The Sydney Morning Herald. “But those who try to … will pay a price dearly in the future.”
While he did not seem to mention them by name, The Sidney Morning Herald pointed out that Splitit rivals Afterpay and Zip both provide lines of credit to consumers and that both ventures have seen their shares drop as investors are worried about what the global pandemic will mean for their business.
Both companies have maintained that the coronavirus has had minimal effects on their businesses. Although, Zip has laid off 64 staff, cutting executive salaries by 20% and delayed its UK launch.
Paterson maintained that Splitit will be in a better position than its competition because the scaleup does not take on any debt itself but is instead utilising the unused credit on a customer’s credit card to pay for an item upfront and then charging the customer in monthly instalments.
“When the virus first broke out we saw a downward trend in transaction volume, but that was brief and soon turned around. And we’ve been very happy with growth over the last four weeks,” Paterson said.
That being said, Splitit share value dropped almost 50% since February. Although, it? has recovered from an all-time low of 22 in late March to last trade at 36, according to The Sidney Herald.
The news comes after Splitit teamed up with Divido, a point of sale financing platform, in October 2019 to offer retailers better choice and flexibility with payments for retailers.
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