QuickFee exits BNPL

The Australian finance company QuickFee Ltd. is bowing out of the U.S. market for buy now, pay later (BNPL). In a statement released on Sept. 13, 2022, the company's board of directors said that BNPL was a drain on its balance sheet. Going forward, the company said it will hone its focus on payment and financing services for the professional services sector.

An email sent on Sept. 15 to ISOs selling BNPL for QuickFee set a formal termination date of Oct. 15. "Customer BNPL plans processed prior to the October 15th deadline will remain intact per the existing terms and conditions signed by your merchants and their customers," the email stated. Merchants, it added, will be notified separately.

News of QuickFee's exit from the business comes as the Consumer Financial Protection Bureau prepares to regulate BNPL companies. The consumer watchdog agency, created under the Dodd-Frank financial reform law, has enforcement authority over all providers of credit, including non-banks like BNPL firms. BNPL services, which allow consumers to split purchases into installments, typically over short time frames (from a few weeks to a few months) and often interest free, have been exploding in recent years. The CFPB, in a newly released report, estimated the five largest BNPL providers, combined, made 180 million BNPL loans totaling $24 billion in 2021. That represented a nearly tenfold increase over 2019, the agency said.

"Buy now, pay later is a rapidly growing type of loan that serves as a close substitute for credit cards," said CFPB Director Rohit Chopra. "We will be working to ensure that borrowers have similar protections, regardless of whether they use a credit card or a buy now pay later loan."

Slowing cash burn

Compared to the big five BNPL firms—Affirm, Afterpay, Klarna, PayPal and Zip—QuickFee hasn't gained much of a foothold in the market. The company reported total transaction values for BNPL in July and August 2022 of just $1 million. That was a huge increase (233 percent) over 2020, but it pales in comparison to the $164.3 million in pay now (ACH and card) and pay later (financing) transactions reported for the firm's U.S. operations in July and August.

"The U.S. BNPL product generated negative gross profit in FY22 of [$141,872] and would require continued investment in order to deliver any material profit contribution," the QuickFee board wrote.

On the other hand, QuickFee has been going great guns in the professional services market, signing 108 new client firms in the United States for its pay now and financing products since January, the company said.

The refinement of focus and reallocation of BNPL staff and other resources already is paying off. "Monthly average underlying cash burn" has been cut to just over $400,000, the company stated.

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