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The Australian: ‘Buy now, pay later’ SMEs service

Exclusive By Joyce Moullakis

To read the story on The Australian website, please click here.

The battle in the often controversial “buy now, pay later” industry is spilling from the consumer into the business sector, with a new player set to push into the market this week.

The Australian can reveal online marketplace and peer-to- peer lender Marketlend is forging ahead with a venture that connects small businesses and their suppliers and facilitates payment over time.

Marketlend has appointed former local American Express head of strategic alliances Karl Lauxmann to drive its buy now, pay later business and lead innovation, partnerships and sales.

But the venture comes as regulators and politicians take a greater interest in the industry, where listed players including Afterpay Touch Group and Zip dominate.


The Australian Securities & Investments Commission is expected in December to release its deep dive into the sector, with the aim of determining whether customers are at risk of harm or the industry requires further regulation.

It also follows the federal government yesterday announcing several measures — including a $2 billion Australian Business Securitisation Fund for regional banks and non-bank lenders — to boost small and medium business’ access to capital at more affordable rates.

“We’ll encourage any government (support) to the market as long as it is to responsible lenders,” Marketlend founder Leo Tyndall said, cautioning that lenders benefiting from the measure should not seek to profiteer from a lower cost of funds.

“When they’re identifying non-bank lenders they have to make sure these lenders are prudential and providing a rate that is economical to the SME and tax effective — not like many of the lenders that are out there who seem to be unscrupulously taking advantage of the tightening of credit for the SME,” he added.


Mr Tyndall’s buy now, pay later division is called UnLock and is based on a model where suppliers and businesses register and Marketlend pays the supplier upfront, less a percentage discount, assuming credit and fraud risk. The business customer doesn’t pay interest.

The term for amounts of as much as $75,000 is up to 90 days, while a large proportion of suppliers typically give business customers 30 days.

“They are able to capitalise on that cashflow … It is an untapped market and these small businesses need these sorts of products,” Mr Lauxmann said.

“You’ve seen the big four (banks) sort of withdraw (from parts of the small business market) and there is a further widening of the gap.”


The buy now, pay later industry has, however, raised the ire of consumer groups over high late payment fees and lax identity checks by some players. Afterpay just this year had to add external identity checks to its proprietary platform checks, after an under-age customer gamed the system to buy alcohol.

Mr Lauxmann said UnLock used a closed-loop system which included credit assessments and identity checks. He admitted if business customers missed direct debits they would be hit by a $25 fee but said it wasn’t a “revenue- generating” grab by the company.

“This is purely about business they are already doing,” he said. “This program doesn’t work if small business is getting into trouble on it.”

Marketlend will also have other players nipping at its heels as it pushes into buy now, pay later, while some businesses may prefer to stick with traditional invoice financing.


Cloudfloat, co-founded by former Telstra project manager Aleem Habibullah, is another player preparing to launch in December. It will initially focus on business customers before weighing an expansion to get more suppliers on board.

The company is said to have had discussions with the innovation hub at the Australian Securities and Investments Commission and the Jobs for NSW lending and funding program.

Its website cites the company performing a “soft credit review” to verify a business owner’s identity and eligibility for a buy now pay later account.

Marketlend is an online marketplace that provides trade credit by connecting borrowers and investors.

Since its formation in 2014, it has funded more than $56 million to Australian businesses.

Prior to starting Marketlend in 2014, Mr Tyndall, a barrister, had stints as UniCredit’s head of capital markets in Asia Pacific, a director at National Australia Bank and a securitisation manager at RAMS Home Loans.

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