Victorian fintechs Afterpay and Touchcorp have merged, and are now taking their innovative shop now, pay later service global.
Since Afterpay launched its unique interest-free payment plans for retail shoppers in 2014, Touchcorp has provided the sophisticated technology underlying the Afterpay platform.
In July 2017, the two companies merged to form the Afterpay Touch Group. Group executive chairman Anthony Eisen said the merger was a logical step, given the already close relationship between the two businesses, and would facilitate international expansion.
“The Afterpay and Touchcorp merger represents a significant milestone and will enable Afterpay to be fully integrated from a technology perspective and boost the growth and earnings potential of the combined business,’’ he said.
“We can already see the benefits of the combined management team working together.
“The current platform will also be an enabler to what is now assessed to be a significant opportunity to expand the Afterpay business in Australia and overseas markets.’’
Co-founder and former CEO of Afterpay, Rick Molnar is now executive director of the merged company and remains responsible for the Afterpay operations both in Australia and abroad.
He said the Afterpay concept was simple: it allows retail customers to take their goods home immediately but pay over time, without requiring them to enter into traditional loan arrangements or pay any upfront fees.
It services an ever-growing catalogue of Australian retailers ranging from major national chains such as Big W, Myer and Officeworks, to small fashion houses and bespoke jewelers.
“If you buy a A$200 pair of shoes, rather than spending A$200, the customer pays through four payments of A$50,” said Molnar.
“We then pay the retailer straight away and we assume all the risk. So it is our responsibility to recover money from the customer.”
Afterpay processes well over A$1 billion in underlying transactions a year, and enjoyed 87 per cent year-on-year growth for the three months to June 2017.
“The key for us is to give customers the best possible experience when they’re shopping in retail, which then allows retailers to sell more product,’’ said Molnar.
“This merger facilitates both of those objectives through great technology and bringing together the best retailers in the country, and a big and growing customer base.”
It was Touchcorp’s sophisticated secure transaction processing technology that provided the technical nous Afterpay needed, enabling its platform to service over 800,000 customers and over 6000 retail merchants smoothly while running real-time security and anti-fraud checks on each transaction invisibly in the background.
Other users of Touchcorp’s technology include 7-Eleven, Commonwealth Bank, Medicare and private health funds.
“The payment infrastructure that Touchcorp have built is the highest level of compliance and scalability in the market,” Molnar said. “They can detect fraud and make sure a person is who they say they are.’’
Group chairman Eisen said Touchcorp’s other business arms were also growing strongly and would see synergies from the merger.
“The Touch businesses in the key mobility, health and retail convenience sectors will continue to receive full executive support and are expected to benefit from the combined platform benefits and innovation focus of the merged group,” Eisen said.
Merger to pave the way for overseas expansion
To date, Afterpay has been a uniquely Australian concept. But with many international retailers like Topshop and Toys ‘R’ Us registered on the platform, Molnar said the group, which is headquartered in Melbourne, is now expanding overseas. Its first international partnerships will be up and running by the end of 2017.
“We have stayed mainly focused on Australia, we wanted to make sure we closed the retail market in Australia and not get distracted,’’ Molnar said.
“I think we’ve successfully done that now and we are looking at how we move into other international markets.
“We’ve slated New Zealand as the first one, as a lot of our Australian retailers are live in New Zealand as well so it is a logical next step. Hopefully that then forms the foundation and technical infrastructure for some other international geographies.
“What people really underestimate is how Australia can provide an amazing launch platform into other global markets. The way Australians are wired means everyone is prepared to give things a go. They embrace new technologies.”