Have you ever delayed buying an expensive item to prevent causing a dent in your wallet and hoping the price might go down? You’re not alone. That’s where Buy-Now-Pay-Later (BNPL) services like Splitit (ASX: SPT) make things a bit easier, allowing you to pay in monthly installments instead of losing a lot of money in one fell swoop.
In January 2021, Splitit signed its initial agreement to provide Google with Splitit’s interest-free installment payment solutions in Japan. That went live in April 2021. Now, it has extended its partnership with Google to enable Splitit’s Instalments-as-a-Service to be added to the Google Store in the US, Canada and Australia, too.
BNPL is big among Aussie users, with the market inundated by a range of players, from Afterpay to Zip. In the US, the BNPL market—though being rigorously reviewed by US regulators—is expected to be valued at over US$100 billion in the coming years. Despite its popularity, the BNPL model has seen its fair share of scrutiny. Some regulators and financial advisors feel that the model harms customers by suffocating them with crushing debt. Splitit claims that it solves that problem. The Company notes that it is the only installment payment solution allowing shoppers to use their existing credit card at checkout “without increasing their debt”.
Splitit is a white-label service (services made by one company but packaged and sold by another), allowing customers to pay in installments, using their existing credit on their payment card at checkout. Unlike traditional BNPL apps, the white-label Splitit service is embedded into the merchant’s website, reducing any friction. It would require no registrations, redirects, sharing of personal info and such.
The Google Agreement shall remain in full force for an initial term of one year and be renewed automatically for successive periods of one year unless terminated earlier. All other terms of the Expanded Google Agreement are not relevant to assessing the impact of the transaction on the price or value of Splitit’s securities.
For its US expansion, shareholders have approved the exercise price of 2,166,667 existing warrants held by Goldman Sachs Bank USA and 4,333,334 warrants yet to be issued to Goldman Sachs Bank USA to be reduced to $0.18 upon Splitit withdrawing funds from the Facility to cater to Google USA consumers.
The value of the Expanded Google Agreement is unknown given the variable nature of revenues dependent on customer uptake. Splitit does expect the Google extension to impact its brand and business development prospects.
In August 2022, the Company raised over $11 million through institutional placements and directors. With this money, Splitit had a three-fold goal of increasing distribution partners, offering a white-label point-of-sale solution, and installing card issuer plug-ins. With the Google agreement, it is well on its way to accomplishing the first goal. On November 7, it also partnered with cloud-based payment services provider Checkout.com to reach more merchants and marketplaces.
If things go to plan, Splitit might be able to transform the BNPL landscape and even build regulators’ trust in the business model.
Alinda is a Business Reporter for The Sentiment
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