Buy Now Pay Later (BNPL) may not work well when it’s customer-oriented, as they might eventually see the dent in their wallet and walk away. However, if it is business-oriented, helping companies get paid on time, it might be a different story. Assisting businesses to keep track of their vendor or client payments, online payment platform QuickFee (ASX: QFE) has had a strong third quarter amid the waning BNPL boom.

The Company’s US Pay Now total transaction values (TTV) increased by 20% to $390.4 million, compared to $325 million in Q3 FY22, driven by growing usage from existing firms and increasing traction from new firms.

QuickFee’s US ACH revenue also increased by 18%, while its US Card revenue grew by 83%. The revenue growth was due to higher surcharges applied, which resulted in increased card revenue yields. In Australia, QuickFee’s financing TTV increased by 38% to $10.9 million, with revenue up by 44%. QuickFee’s “Q Pay Plan” product, which includes the Jim’s Group Franchise agreement, grew TTV by 150% in Q3 FY23 to $500k.

Commenting on the Q3 FY23 quarter, Non-executive Chairman Dale Smorgon said, “We are very pleased to see the continued momentum across the QuickFee group. The growth being achieved across all key business drivers is reflective of our refined strategy which is focused on our core professional services offering, as well as benefiting from economic tailwinds.”

In Q3 FY23, 23 new professional services firms were signed in the US, marking a slight decrease from Q2 FY23. Despite this, ACH revenue yields remained consistent with the previous year’s figures. However, there was a noteworthy increase in Card revenue yields from 0.14% to 0.22%, driven by a surge in card surcharges from 3.0% to 3.5% in April 2022.

But changes are afoot in the credit card space, as Visa has announced a surcharge cap of 3% on credit cards, effective from April 15, 2023. Additionally, Mastercard has implemented rules that limit its maximum surcharge to that of other card issuers. As a result, the Card product in the US is expected to experience yield compression in the future, reducing it to historic levels of between 0.12% – 0.14%.

Smorgon added, “Challenging economic conditions typically drive demand for lending products, and this is exactly what we are seeing in both the US and Australian markets, where we continue to post strong growth in lending volumes. Separately, the work we have done to build our client and firm base, along with the continued growth of existing firms, continues to propel our Pay Now business forward, which is tracking well ahead of a US$1 billion annual volume run-rate.”

Despite the positive performance, QuickFee’s total net working capital has declined by 1.2% to $10.4 million, and liquidity has fallen by 1.1% to $8.9 million. 

QuickFee’s North American President, Jennifer Warawa, commented, “The US represents a huge opportunity for QuickFee, with our current portfolio of accounting firms generating around US$8.8 billion in revenue, of which we capture just 12% via our platform. While the accounting sector has been our largest, we are seeing pleasing growth in law firm numbers; in a recent survey3 73% of law firms said that greater use of technology to become more competitive was a key priority for CY2023 and we are hearing this same sentiment from the law firms we speak to.”