The Collapse Of LayBuy: A Buy Now, Pay Later Firm

LayBuy, a Buy Now Pay Later firm, is facing financial trouble and an unpredictable future.

The company operates in the UK, New Zealand and Australia, but was assigned administrators after unsuccessfully securing more investments.

It has an estimated 500 000 users around the world, with more than 50% based in the United Kingdom.

According to The Sun UK, LayBuy is not accepting any new transactions and its website was disabled earlier this month.

What Is Buy Now Pay Later?

Buy Now Pay Later (BNPL) is a popular payment plan where consumers can purchase a product and pay it off in monthly instalments.

The total cost is usually divided into smaller, equal amounts and paid off within a set time period.

This comes in handy for larger purchases to avoid a large upfront cost, and offers an alternative to traditional credit cards.

These have a stricter approval process and higher fees, therefore BNPT has become an attractive payment method for consumers.

This is due to its convenience and flexible options.

Buy Now Pay Later vs Credit Cards

Both payment options allow for products to be paid over time in instalments, but they have different structures and requirements.

Credit cards can be used just about anywhere, while BNPL is typically only used for retail stores.

Cardholders can choose their timeframe to pay off a product, and these are usually longer than those of BNPL firms so it gives you more breathing room.

However, the credit card approval process takes more time and background checks are required.

More fees are involved with having a credit card that you will pay for, including annual and late payment fees.

Who Are LayBuy?

LayBuy was established in 2017 and offered interest-free payments over six weeks on e-commerce products.

Payments would be automatically charged to your card each week until your product was paid off, allowing you to make purchases even if you didn’t have the full amount available upfront.

Users could download the app and easily manage their payment schedules and card details.

The company offered its services to any permanent resident of the UK, Australia or New Zealand.

It also provided online merchants with a platform to receive their payments immediately from LayBuy while giving customers their six week payment plan.

It offered a variety of resources for e-commerce stores to boost their marketing efforts, turning first-time buyers into repeat customers. Approximately 2,600 stores in the UK were signed up to LayBuy.

How Are Current Customers Affected?

Existing customers are still liable for payments and will have their cards charged weekly as normal.

Users are able to log into their accounts but cannot reopen closed accounts and new account sign-ups are not currently being accepted.

You can still update your details on the app, make manual payments and arrange for refunds if needed.

If you have an active account, you won’t be able to make any new purchases on it.

The business has remained transparent with its customers and encourage users to contact them for any questions.

What Does It Mean To Have Appointed Administrators?

LayBuy has been appointed administrators in the UK, which means that the business has been handed over to practitioners who are accredited to assist with insolvency.

This happens when a business is facing financial issues and needs to pay its debt at a more affordable rate.

Administrations don’t typically last more than a year, but can be extended beyond this time frame if its needed.

The goal of the administrator is to suggest ways in which the business can pay the debt that it owes and support its cashflow.

This process doesn’t always necessarily mean that the business will close permanently, and it can still be bought.

If this doesn’t happen, the business may be liquidated, but LayBuy’s administration appointment is still in its early days.

What Happens Next For LayBuy?

LayBuy’s administration is still in its infancy and its future remains unknown at this point until more information becomes available.

The lesson from this is for BNPL platforms to be held accountable for protecting its users, according to UK finance expert, Kevin Mountford.

“With BNPL platforms continuing to contribute to credit scores, this uncertainty will cause significant concern for their users,” he said.

Users will be hesitant to use these services, and rightly so, so not only is LayBuy’s future uncertain but the rest of BNPL platforms too.