What started as a way to ease buyers’ financial stresses grew into one of their biggest stressors: Buy Now, Pay Later (BNPL). Bad debts and reckless spending has shined a light on the downsides of BNPL and its subsequent decline; yet, some digital payment service providers, like IOUPay (ASX: IOU), refuse to give up on it. 

IOUPay typically services the Southeast Asian market, with a special focus on Malaysia. In the first half of FY23, it reported a minor revenue increase of 8% to $4.7 million. Its loss improved by 60% to $2 million. However, the Company’s available cash reserves fell by nearly one-third to $4.4 million from over $15 million at the end of 2021. 

Where did the money go?

Possibly, in covering shoppers’ assets.

The Company launched BNPL via myIOU in June 2021. In H1 FY23, its total transaction value amounted to $14 million. Sounds great, right? However, break it down and you find that the second quarter of FY23 is responsible for only $4.4 million of it. The majority chunk of this money came from the first quarter, thus signalling a growing decline in BNPL’s uptake. 

That hasn’t deterred the Company, though. To improve its accounting and credit lines, it increased staff by 9%. Plus, it got influencers on board.

IOUPay decided to upgrade its digital marketing strategy to gain customers. So, it is using social media influencers to promote its product. It even got celebrities involved, including Hong Kong actress Priscilla Wong and Malaysian actor and model Syafiq Kyle, to become brand ambassadors. But could star power make up for the fact that BNPL is losing its utility? IOUPay hopes.

The Company’s marketing team conducted several brand awareness initiatives, customer surveys and promotional campaigns, including various media such as billboards and cinema advertising, to expand the reach and develop consumer engagement. It is using the collected data to gauge what customers would respond best to. 

To diversify its revenue streams, on September 9, 2021, the Company announced a strategic investment to acquire 42% of Malaysian financial services company I.Destinasi Sdn Bhd (“IDSB”) for $41.6 million, to be paid in two segments over six months. However, in H1 FY23, it announced a variation. It reduced its overall acquisition stake to 34%, reducing the price to $23.3 million.

IOUPay is also partnering with companies in Southeast Asia to keep BNPL alive. But it looks like it is ignoring the bigger market trends. 

Though its focus is on expanding the Malaysian market, it accumulated losses of over $1 million in the region. Its other markets—Singapore and Australia—remained largely ignored and also rung in losses of over $300k, with the report not mentioning their revenue or performance. While Indonesia provided some relief, it also appears to be a neglected space. 

It’s challenging to get inside the Company’s head and deduce what it’s up to. Whatever it is, we hope it is better than it looks.