Buy now, pay later lender Laybuy suspends payments

Friday, 14 June 2024

The Laybuy buy now, pay later lending service has suspended payments across the world leading to speculation among users that the company is in difficulty.

However, a source in the finance industry said Laybuy was close to being sold.

Laybuy is a New Zealand company that expanded into Australia and the UK, making interest-free loans to users to buy things in stores and online, and was marketed as a cheaper, safer way to borrow than a credit card.

But users have been left unable to make payments, and a message on the Laybuy website says: “Payment services are currently suspended across all regions. This impacts our customers ability to create new orders online and in store.

“During this time all existing orders will be processed as normal,” the message reads.

“We’ll share more information as it comes.”

Laybuy shares used to be traded on the Australian ASX sharemarket, but the company delisted last year in a bid to cut costs.

The company was launched by New Zealand businessman Gary Rohloff and his son Alex Rohloff, but undertook a major restructuring in 2022, reducing its staff by about a third and cancelling some projects to save money as it strove to become profitable.

Laybuy shares are now periodically traded on the New Zealand Catalyst marketplace.

Companies whose shares are bought and sold through “trading events” on the Catalyst website have to keep shareholders informed of material information during those trading events.

However, unlike companies listed on the ASX, or the NZX New Zealand sharemarket, there is no duty of ongoing disclosure.

The last document uploaded for investors on Catalyst’s marketplace was an investor presentation in April last year including its “strategy to achieving profitability” which was focused on reducing costs, retaining quality customers, and reducing fraudulent activities using Laybuy accounts.

Financial figures covering up until the third quarter of 2023 showed Laybuy was losing money.

It shows it had lines of credit with ANZ and Kiwibank to fund its lending.

Laybuy and Rohloff have been approached for comment.

A post on the Laybuy website on Thursday said the company was undertaking “maintenance upgrades”, during which people wouldn’t be able to sign up to Laybuy, or make a new purchases, however people could still make repayments on amounts they owed.

Despite tough times for households demand for buy now, pay later loans are on the rise, data from credit reporting company Centrix showed, but demand was still 20% lower than it was in mid 2021.

Buy now, pay later loans is often cited by financial mentors as being a form of lending which it is far too easy for people to access, and too often becomes a problem for borrowers.

At the end of April, Centrix data showed 8.7% of buy now, pay later accounts were in arrears, with borrowers having missed repayments, though that was trending down from a peak of just over 10% in mid-2023.