A new SA lay-bye option charges no interest or fees to timely payers - here’s how it works
- A new South African business, PayJustNow, allows shoppers to split payments over three months, with no fees or interest - provided you pay up on time.
- Skip a payment, though, and they'll deduct R125 from your account per week, to a total of 25% of the purchase price.
- All of the costs are borne by the merchants, who pay an additional fee to the company who says they offset this fee by converting new sales.
- There are currently over 600 merchants who accept this as a payment option - but in the early launch stage, these range from a few big names to some fairly obscure small businesses.
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A new South African payment business is aiming to disrupt the buy now, pay later market with its own take on the traditional lay-bye model.
Called PayJustNow, the business is promising a novel payment approach that gives consumers the option to pay just one third of the purchase price of an item upfront, have the items ship immediately, and then only have a responsibility to pay the balance over the subsequent two months.
On the merchant side, the company says it will help businesses boost sales from both existing and new customers, and achieve higher conversation rates.
On the surface PayJustNow appears similar to a more traditional buy now, pay later business model that entices people with limited cash to pay for an expensive item over an extended period of time - usually at a high interest rate.
However, central to PayJustNow’s business model is that - provided shoppers hit all their repayment dates - they can spread your purchase payment out over three months without any interest or fees.
In order to use the process, consumers can sign up on the PayJustNow website or application.
As with traditional credit applications and checks, the registration form requires extensive personal information, including name, identity number, net income range, date of payday, and full contact details.
During the registration process, they also allow you to opt in to being tracked while using the PayJustNow mobile application, which the terms and conditions say enables them “to mitigate any risk of fraudulent activity on your account”. It is possible, however, to register without activating this feature.
New shoppers can only make purchases up to a specified amount that’s customised according to each shopper’s profile - which is determined instantly - and, presumably until their reliability is certified, they can only make one delayed payment purchase at a time.
The shopping process
Once the registration process is complete, shoppers can then navigate to one of several hundred participating retailers - or make purchases in store.
The integration into online stores is subtle - all of the action happens at the payment gateway, where shoppers would typically enter credit card details. Instead, it’s at this point that PayJustNow customers can enter their login details, settle the first third of their bill, and then activate their lending facility.
PayJustNow is quick to highlight that they are consumer focused, and all costs are borne out by the merchants. Merchants therefore pay an PayJustNow a presumably higher than normal fee in exchange for delivering customers to their doors or websites.
The no-fee model is similar to that of online food delivery services, who make the bulk of their money by charging restaurants a percentage profit of all sales - and although PayJustNow does not charge shoppers any kind of fee directly, it’s possible, although admittedly unlikely, that merchants will increase the cost of their items to cover these costs at some point.
For now, though, it appears as if participating stores are playing ball and not charging differential fees depending on your payment method.
This no-fee approach also means that your personal information and data is a commodity - to a point. PayJustNow says, among others, it will use your personal information "to guide decisions about our products, services and communications", and they "may disclose aggregate statistics (information about the customer population in general terms) about the personal information to advertisers or business partners".
The system is not entirely fee-free, however. Although shoppers will not incur any interest or penalties if they pay on time, those who miss payments after this are automatically charged R125 each time PayJustNow attempts to reprocess the payment - which for now happens on a weekly basis.
The total value of these fees won’t, however, exceed 25% of the full value of the transaction.
In many ways PayJustNow, which is driven by its app and website, is also a shopping gateway - and its success therefore rests largely on the number and diversity of retailers who support the platform.
Company CEO Craig Newborn admitted in an interview on The Money Show that getting retailers on board was initially a “hard sell”, but they’ve since seen the benefit of having his company as a referrer of new business and a way to convert more sales.
At present, the range of retailers currently offering PayJustNow are a curious selection - and aside from a few big brands the remainder resemble the type of stores you might find at a neighbourhood shopping mall.
There are over 600 participating stores carrying a variety of items - from cameras to sports and outdoors equipment. One of the bigger suppliers at this stage appears to be Cape Union Mart, whose in-house brands like Poetry and Old Khaki, are also represented. Other standalone brand stores also exist - such as those for Salomon, Timberland, Lizzard, and Kingsley Heath.
But between the smattering of well known stores and brands, there are also some curious smaller merchants that make up the bulk of the 600-odd on offer.
These stores, many of which are extremely niche and sell things like drones, skin care equipment, blank guns, and bonsais, will presumably need to generate enough sales alongside the better-known brands if the PayJustNow business model is to be sustainable.
At present, however, it appears as if customers are appreciating the product. After 109 reviews on Google, the payment gateway is sitting with a rating of 4.9 out of 5, pulled down by a low rating for a failed application.
Whether the business will be sustainable and an ongoing success remains to be seen - but given the difficult economic times many in South Africa are facing, it’s likely that this fairly innovative, consumer-centric platform will continue to garner interest from an already cash-strapped population.
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