1 00:00:03,430 --> 00:00:06,360 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. 2 00:00:06,720 --> 00:00:09,760 Sean Aylmer: The buy now pay later space is pretty crowded with Afterpay 3 00:00:10,410 --> 00:00:14,270 Sean Aylmer: and ZipCo competing with Klarna, Affirm, PayPal, and a whole 4 00:00:14,270 --> 00:00:17,560 Sean Aylmer: bunch of others. To stand out, fintechs need to establish 5 00:00:17,610 --> 00:00:20,600 Sean Aylmer: a point of difference, which is what my guests today 6 00:00:20,600 --> 00:00:24,450 Sean Aylmer: has done. BizPay is a buy now pay later provider, 7 00:00:24,760 --> 00:00:28,380 Sean Aylmer: but it's business- to- business. David Price is the founder 8 00:00:28,380 --> 00:00:32,200 Sean Aylmer: and CEO of BizPay and my guest this morning. David, welcome 9 00:00:32,200 --> 00:00:32,900 Sean Aylmer: to Fear and Greed. 10 00:00:33,460 --> 00:00:35,239 David Price: Sean, thank you very much for having me. 11 00:00:35,720 --> 00:00:38,159 Sean Aylmer: So, as I said, it's a very crowded market. How 12 00:00:38,159 --> 00:00:40,569 Sean Aylmer: did you find your niche? The B2B niche? 13 00:00:40,950 --> 00:00:45,349 David Price: Yeah, so we don't consider the B2B a niche really 14 00:00:45,350 --> 00:00:49,170 David Price: in a crowded market. We consider it a completely separate 15 00:00:49,170 --> 00:00:53,880 David Price: market segment. So, you have the huge business- to- consumer 16 00:00:54,250 --> 00:00:58,070 David Price: segment of the market, which is over $10 trillion. And 17 00:00:58,070 --> 00:01:01,950 David Price: then there's this whole other side of the world's global economy, 18 00:01:02,290 --> 00:01:07,500 David Price: where there is actually over $50 trillion of business invoicing 19 00:01:07,500 --> 00:01:13,410 David Price: being processed globally per year. And if you exclude merchants, 20 00:01:13,810 --> 00:01:19,340 David Price: which companies like Afterpay, Klarna, Affirm, PayPal have better access to, 21 00:01:19,580 --> 00:01:22,419 David Price: if you just exclude all of that, there's still $25 trillion 22 00:01:23,530 --> 00:01:27,890 David Price: of invoicing occurring through companies that none of the other 23 00:01:27,890 --> 00:01:32,450 David Price: players have access to. So, if you think about lawyers, accountants, recruiters, 24 00:01:32,750 --> 00:01:36,589 David Price: none of those actually offer Square or PayPal as a 25 00:01:36,590 --> 00:01:39,590 David Price: payment option on their invoices. So, the other companies don't 26 00:01:39,590 --> 00:01:42,310 David Price: have access to this whole other segment, which is at 27 00:01:42,310 --> 00:01:47,060 David Price: least $25 trillion. And there is this opportunity where all 28 00:01:47,060 --> 00:01:51,500 David Price: your professional service providers and other businesses are invoicing, and 29 00:01:51,500 --> 00:01:54,800 David Price: there's an opportunity to provide another way to pay on 30 00:01:54,800 --> 00:01:58,100 David Price: that point of invoice, which is very different to B2C, 31 00:01:58,100 --> 00:02:00,860 David Price: where you're generally providing another way to pay in the e- 32 00:02:00,860 --> 00:02:05,790 David Price: checkout card. So you have an almost, completely blue ocean 33 00:02:05,790 --> 00:02:11,840 David Price: opportunity that the rest of the buy now pay later conglomeration of companies are 34 00:02:11,840 --> 00:02:13,750 David Price: not targeting and don't have any access to. 35 00:02:14,130 --> 00:02:16,270 Sean Aylmer: David. I must admit I haven't really thought about the 36 00:02:16,270 --> 00:02:19,330 Sean Aylmer: B2B opportunity, but as you say, it is blue sky, 37 00:02:19,330 --> 00:02:23,100 Sean Aylmer: it's huge. So, take me through how BizPay works. I'd 38 00:02:23,100 --> 00:02:27,160 Sean Aylmer: imagine in terms of cashflow and some of those typical business problems, 39 00:02:27,430 --> 00:02:31,400 Sean Aylmer: this buy now pay later invoicing actually could really help things. 40 00:02:31,669 --> 00:02:35,540 David Price: Yes. Exactly. So, small to medium businesses all have a 41 00:02:35,540 --> 00:02:39,660 David Price: huge amount of cashflow volatility and surveys consistently every year 42 00:02:39,660 --> 00:02:42,690 David Price: put it in the top three existential concerns for a business. So, 43 00:02:42,780 --> 00:02:46,859 David Price: cashflow is really in the way of businesses just getting 44 00:02:46,860 --> 00:02:50,430 David Price: into their normal flow of doing business. They're waiting for 45 00:02:50,480 --> 00:02:53,540 David Price: customers that are late to pay them. In Australia, the 46 00:02:53,540 --> 00:02:56,700 David Price: average 30- day invoice is paid on 36 days. 47 00:02:56,710 --> 00:02:56,740 Sean Aylmer: Yep. 48 00:02:57,020 --> 00:02:59,820 David Price: So, about almost a week late. You also just have 49 00:02:59,820 --> 00:03:03,130 David Price: your general peaks and troughs of good months, bad months 50 00:03:03,180 --> 00:03:06,530 David Price: in a small to medium business of those cash inflows. 51 00:03:06,880 --> 00:03:09,919 David Price: And that really gets in the way of businesses being 52 00:03:09,919 --> 00:03:12,929 David Price: able to afford certain things that they need in those 53 00:03:13,000 --> 00:03:16,470 David Price: months where there is a bit of a dearth of 54 00:03:16,470 --> 00:03:20,910 David Price: cash available. So, we know businesses have this need to 55 00:03:20,910 --> 00:03:25,760 David Price: smooth over cashflow, and historically they have been using small 56 00:03:25,760 --> 00:03:29,840 David Price: to medium business loans or overdrafts or those type of- 57 00:03:30,340 --> 00:03:31,231 Sean Aylmer: Yeah. Factoring that sort of stuff. 58 00:03:31,231 --> 00:03:35,010 David Price: ... product structures to assist them to smooth the flows. 59 00:03:35,330 --> 00:03:38,580 David Price: We've come in, and we've said there is a different 60 00:03:38,580 --> 00:03:41,750 David Price: way to do it. We can solve your cashflow volatility 61 00:03:41,990 --> 00:03:45,240 David Price: with a very short- tenured product. So, what buy now 62 00:03:45,240 --> 00:03:48,880 David Price: pay later has brought to the market is two very 63 00:03:48,880 --> 00:03:52,380 David Price: significantly new things from our perspective. So number one, it 64 00:03:52,380 --> 00:03:55,220 David Price: is seen as a payment product rather than credit or 65 00:03:55,220 --> 00:03:58,920 David Price: lending. Why that's really important is if you imagine a 66 00:03:59,300 --> 00:04:02,500 David Price: young millennial female walking into Zara to buy a dress, 67 00:04:04,930 --> 00:04:08,150 David Price: Afterpay could never say, well, Zara could never say, would you like a new credit 68 00:04:08,150 --> 00:04:11,060 David Price: card to buy this dress? Or would you like a bank loan 69 00:04:11,060 --> 00:04:14,500 David Price: to buy this dress? Distributing a credit or lending product at the 70 00:04:14,500 --> 00:04:17,900 David Price: point of sale is just too awkward, but they were 71 00:04:17,900 --> 00:04:20,529 David Price: able to say and are able to say, would you 72 00:04:20,529 --> 00:04:22,940 David Price: like to pay for this dress with Afterpay because it's 73 00:04:22,940 --> 00:04:25,930 David Price: seen as a payment product. So, buy now pay later is 74 00:04:25,930 --> 00:04:27,339 David Price: seen as another way to pay. 75 00:04:27,440 --> 00:04:27,440 Sean Aylmer: Yep. 76 00:04:27,441 --> 00:04:29,830 David Price: It's the same thing on an invoice. If you're a 77 00:04:29,830 --> 00:04:32,220 David Price: big accounting firm or a big law firm, you're not 78 00:04:32,220 --> 00:04:33,990 David Price: going to say to your clients, do you want a 79 00:04:33,990 --> 00:04:37,350 David Price: small to medium business loan to pay for this invoice 80 00:04:37,510 --> 00:04:40,690 David Price: or some other financing product? So, it's really key to 81 00:04:40,690 --> 00:04:44,690 David Price: being structured as another way to pay. So, to be 82 00:04:44,690 --> 00:04:46,979 David Price: seen as another way to pay, it is really key 83 00:04:47,420 --> 00:04:49,029 David Price: that there's a short tenure. 84 00:04:49,320 --> 00:04:49,390 Sean Aylmer: Yep. 85 00:04:49,740 --> 00:04:52,410 David Price: And that's what buy now pay later has introduced to the market, 86 00:04:52,410 --> 00:04:56,360 David Price: that short tenure of four installments. The other thing that 87 00:04:56,360 --> 00:05:01,610 David Price: installments do has a very interesting psychological effect. When we 88 00:05:01,610 --> 00:05:03,919 David Price: pay for something with a credit card. If we go 89 00:05:03,920 --> 00:05:08,029 David Price: back to the example of a dress at Zara, a $150 dress, 90 00:05:08,300 --> 00:05:11,080 David Price: if it's on a credit card still feels like a $150 91 00:05:11,080 --> 00:05:14,670 David Price: dress just being paid for later. When you break something 92 00:05:14,670 --> 00:05:20,330 David Price: into installments, the psychology shows that actually, the brain interprets 93 00:05:20,330 --> 00:05:24,500 David Price: it as more affordable and cheaper. So, that is why both 94 00:05:24,500 --> 00:05:27,140 David Price: on the B2C side and the B2B side, you have the 95 00:05:27,140 --> 00:05:30,050 David Price: effects of increase in conversion rates. So, more nos and maybe's 96 00:05:30,050 --> 00:05:34,089 David Price: becoming yes's to the purchase and an increase in basket 97 00:05:34,089 --> 00:05:39,810 David Price: size or transaction size. So, splitting into installments actually creates 98 00:05:39,810 --> 00:05:44,350 David Price: an effect where buy now pay later or BizPay is 99 00:05:44,720 --> 00:05:48,810 David Price: a sales tool for the supplier. So, to run you 100 00:05:48,810 --> 00:05:53,620 David Price: through two practical examples. Recruiters that use BizPay are able 101 00:05:53,620 --> 00:05:58,680 David Price: to go onto SQL, LinkedIn, 85% of the market, don't use 102 00:05:58,740 --> 00:06:02,250 David Price: external professional recruiters, they try to recruit themselves. And one 103 00:06:02,250 --> 00:06:05,039 David Price: of the big reasons they're doing that is cashflow. It's 104 00:06:05,040 --> 00:06:08,640 David Price: not that they don't see or understand the value proposition of recruiters. They 105 00:06:08,640 --> 00:06:10,760 David Price: would like to use recruiters. They know recruiters will find 106 00:06:10,760 --> 00:06:16,210 David Price: them better candidates and save them time, especially. So, recruiters 107 00:06:16,210 --> 00:06:19,650 David Price: are able to go on to Seek, for example, or 108 00:06:19,650 --> 00:06:22,429 David Price: another job board and say, " We see you're trying to 109 00:06:22,430 --> 00:06:24,170 David Price: recruit yourself. Did you know you can actually pay over 110 00:06:24,440 --> 00:06:28,089 David Price: four monthly installments?" And they're able to convert a non- 111 00:06:28,089 --> 00:06:30,680 David Price: recruiter user into a recruiter user. 112 00:06:31,320 --> 00:06:31,430 Sean Aylmer: Mm- hmm ( affirmative). 113 00:06:31,430 --> 00:06:35,250 David Price: So, that's an example of an increase in conversion rate. An 114 00:06:35,250 --> 00:06:38,700 David Price: example of an increase in transaction size, let's say there's 115 00:06:38,700 --> 00:06:42,270 David Price: a research firm and they're trying to sell a $30, 000 116 00:06:42,270 --> 00:06:44,440 David Price: piece of work to an end client. So, they put 117 00:06:44,440 --> 00:06:48,500 David Price: a proposal to the end client. The end client says, " I can't really manage 30, 118 00:06:49,029 --> 00:06:51,729 David Price: 000. What can you do for smaller project for 20,000?" 119 00:06:52,220 --> 00:06:53,770 David Price: They can then go back to their client and say, "Did you know 120 00:06:54,250 --> 00:06:56,320 David Price: you can pay over four months with BizPay? It will only 121 00:06:56,320 --> 00:06:59,330 David Price: be 7, 500 a month plus a small fee. 122 00:06:59,490 --> 00:06:59,700 Sean Aylmer: Okay. 123 00:06:59,700 --> 00:07:03,089 David Price: And so, suddenly, it's more affordable. So, they're able to 124 00:07:03,089 --> 00:07:08,420 David Price: get the $ 30,000 project over the line. So, the buy now pay later is 125 00:07:08,420 --> 00:07:11,960 David Price: bringing those effects of being seen as a payment product 126 00:07:12,060 --> 00:07:16,580 David Price: and actually working as a sales tool for a supplier. 127 00:07:16,850 --> 00:07:20,440 David Price: So, it serves the needs of the supplier in terms 128 00:07:20,440 --> 00:07:23,330 David Price: of increasing their sales and revenue. For the end client, 129 00:07:23,330 --> 00:07:26,510 David Price: it really helps their cashflow. So, it is a win- 130 00:07:26,510 --> 00:07:29,989 David Price: win. And how it works, to just run through the 131 00:07:30,100 --> 00:07:34,700 David Price: practicalities very quickly. We're generally a button on the invoice. 132 00:07:34,930 --> 00:07:38,290 David Price: So, the law firm will send the invoice out, and 133 00:07:38,290 --> 00:07:40,640 David Price: the end client will receive an invoice, and it says 134 00:07:40,640 --> 00:07:44,270 David Price: pay the normal way by EFT or click here and pay via 135 00:07:44,910 --> 00:07:48,020 David Price: BizPay. Person will click that button, go into our system, 136 00:07:48,360 --> 00:07:52,100 David Price: and will very quickly process a sign- up and evaluation 137 00:07:52,100 --> 00:07:54,320 David Price: for them, and within a few minutes, they can be 138 00:07:54,320 --> 00:07:57,520 David Price: paying the invoice, which comes out of their account as 139 00:07:57,520 --> 00:08:02,170 David Price: direct debit. Where there's a slight tweak versus what happens 140 00:08:02,220 --> 00:08:05,600 David Price: on the B2C side of the market. On the B2C 141 00:08:05,600 --> 00:08:08,930 David Price: side of the market, merchants have been used to, for 142 00:08:08,930 --> 00:08:11,640 David Price: a long time, paying credit card fees. So, they've been 143 00:08:11,640 --> 00:08:14,250 David Price: giving away 2. 4% of their margin- 144 00:08:14,330 --> 00:08:14,331 Sean Aylmer: Yep. 145 00:08:14,331 --> 00:08:17,260 David Price: ... already. So, when the Afterpays of the world came 146 00:08:17,260 --> 00:08:19,890 David Price: in and said, you're going to have to pay 4%, that's 147 00:08:19,890 --> 00:08:23,320 David Price: only an increase of about 1.6% of what they used 148 00:08:23,320 --> 00:08:26,920 David Price: to pay. Service providers are not used to giving away margins. So, 149 00:08:26,920 --> 00:08:31,040 David Price: there is more price sensitivity or elasticity if you charge 150 00:08:31,040 --> 00:08:34,510 David Price: them a significant margin. And what we found is that 151 00:08:34,640 --> 00:08:39,750 David Price: on the end client- side, businesses are less price- sensitive than individuals. So, 152 00:08:39,750 --> 00:08:42,530 David Price: as long as the fee's quite small and very competitive 153 00:08:42,910 --> 00:08:46,240 David Price: versus other forms of credit and borrowing that they can do, 154 00:08:46,450 --> 00:08:49,600 David Price: they're not very sensitive to price. So, we charge a little 155 00:08:49,600 --> 00:08:52,410 David Price: bit to both sides. We charge the supplier a very 156 00:08:52,410 --> 00:08:56,719 David Price: small fee, much smaller than B2C buy now pay later's charge. 157 00:08:56,720 --> 00:08:59,599 David Price: And then we charge the end customer a little bit 158 00:08:59,600 --> 00:09:02,130 David Price: of a fee as well, but it's actually very competitive 159 00:09:02,420 --> 00:09:07,300 David Price: versus other kinds of borrowing, especially alternative borrowing. And so, 160 00:09:07,650 --> 00:09:10,150 David Price: it ends up being really cheap for both sides and 161 00:09:10,340 --> 00:09:15,059 David Price: works really well. And we have two product variations at BizPay. So, 162 00:09:15,059 --> 00:09:19,010 David Price: there's a product where you can pay installments every two weeks, 163 00:09:19,010 --> 00:09:21,620 David Price: the first installments at 30 days when the invoice is due, 164 00:09:21,960 --> 00:09:25,059 David Price: and then you pay each of the four installments each 165 00:09:25,059 --> 00:09:28,150 David Price: two weeks, or you can extend those to two weeks 166 00:09:28,150 --> 00:09:31,270 David Price: to a month. So, pay installments each month. And so, 167 00:09:31,270 --> 00:09:36,069 David Price: very simply, a $ 20,000 legal Bill becomes $5, 000 plus 168 00:09:36,070 --> 00:09:36,910 David Price: a small fee. 169 00:09:37,200 --> 00:09:37,201 Sean Aylmer: Okay. 170 00:09:37,201 --> 00:09:39,980 David Price: And so, it's much more manageable from a cashflow point 171 00:09:40,120 --> 00:09:42,010 David Price: of view for that money, that 5, 000 taken out of 172 00:09:42,980 --> 00:09:44,959 David Price: your bank account at the end of the month instead 173 00:09:44,960 --> 00:09:46,100 David Price: of the full 20, 000. 174 00:09:46,440 --> 00:09:48,209 Sean Aylmer: Stay with me, David, we'll be back in a minute. 175 00:09:53,300 --> 00:09:56,020 Sean Aylmer: I'm speaking to David Price, founder and CEO of BizPay. 176 00:09:56,860 --> 00:09:58,869 Sean Aylmer: Okay. So what's the take up rate been like? 177 00:09:59,200 --> 00:10:04,380 David Price: So, what is different with B2B versus B2C is that 178 00:10:04,380 --> 00:10:08,170 David Price: the average transaction size that we do is about $ 17,000. 179 00:10:08,460 --> 00:10:08,700 Sean Aylmer: Right. 180 00:10:08,740 --> 00:10:13,079 David Price: Whereas on the B2C side, it's $ 160. So, our average transaction 181 00:10:13,080 --> 00:10:16,890 David Price: size is over a hundred times larger than the B2C 182 00:10:16,890 --> 00:10:20,860 David Price: market. And so, we build up transaction volume much faster than 183 00:10:20,880 --> 00:10:25,050 David Price: B2C. When we acquire a customer, they're also using us 184 00:10:25,050 --> 00:10:28,220 David Price: more times per month than happens on the B2C side. 185 00:10:28,220 --> 00:10:31,080 David Price: So if you imagine, again, the fashion example, how many 186 00:10:31,080 --> 00:10:34,730 David Price: times can people shop for fashion a year? I'm sure 187 00:10:34,730 --> 00:10:36,840 David Price: there's some people that can do it multiple times a month, 188 00:10:36,840 --> 00:10:39,699 David Price: but on average, it looks like it's six to eight 189 00:10:39,700 --> 00:10:43,069 David Price: times a year if you're quite a fashion- conscious millennial 190 00:10:43,070 --> 00:10:46,300 David Price: shopper. If you then pivot to the example of a 191 00:10:46,300 --> 00:10:50,260 David Price: small to medium business, they have multiple lumpy invoices every 192 00:10:50,260 --> 00:10:53,290 David Price: month. So, that is what we see. We see our 193 00:10:53,290 --> 00:10:56,190 David Price: customers using us multiple times a month. So, we have, 194 00:10:56,570 --> 00:11:00,070 David Price: on average, more than 30 transactions per year in the 195 00:11:00,070 --> 00:11:03,819 David Price: first year with a new customer, versus on B2C, you 196 00:11:03,820 --> 00:11:06,380 David Price: see on average eight to 12 in the first year, 197 00:11:06,770 --> 00:11:10,679 David Price: and each transaction is over a hundred times larger. So, 198 00:11:10,679 --> 00:11:13,920 David Price: the transaction volume being built up is so much more 199 00:11:13,920 --> 00:11:17,720 David Price: sizeable per customer than what you see on the B2C side. 200 00:11:17,980 --> 00:11:22,270 David Price: So, what happens with our business is we're actually constrained 201 00:11:22,270 --> 00:11:25,240 David Price: by our access to capital as a young business. 202 00:11:25,370 --> 00:11:25,420 Sean Aylmer: Yep. 203 00:11:25,840 --> 00:11:29,709 David Price: The transaction volume really grows at a very exponential rate, 204 00:11:29,910 --> 00:11:34,110 David Price: and we have to grow into being able to manage 205 00:11:34,110 --> 00:11:37,610 David Price: that capacity or put another way, there's this huge market 206 00:11:37,610 --> 00:11:41,219 David Price: out there, $ 25 trillion. There's not a lot of competition 207 00:11:41,220 --> 00:11:44,829 David Price: out there. So, there's more than enough demand to chase 208 00:11:44,850 --> 00:11:48,689 David Price: out there and capture. But it's more about growing the 209 00:11:48,730 --> 00:11:53,010 David Price: business' internal capacity and access to capital to manage all 210 00:11:53,010 --> 00:11:56,370 David Price: that demand. COVID has actually accelerated that. So you see 211 00:11:56,370 --> 00:12:00,929 David Price: that on B2C side and B2B side, people have had more cashflow 212 00:12:00,929 --> 00:12:06,140 David Price: constraints they need more alleviating. So, COVID has really supercharged 213 00:12:06,140 --> 00:12:08,750 David Price: buy now pay later, both on the B2C side and 214 00:12:08,750 --> 00:12:12,679 David Price: the B2B side. And in Sydney now coming out of 215 00:12:12,679 --> 00:12:16,470 David Price: lockdown, BizPay's actually running a back- to- business special where 216 00:12:17,010 --> 00:12:19,050 David Price: we've cut our prices in half. We just want to 217 00:12:19,050 --> 00:12:21,830 David Price: support the business community. So, we're not making any profit 218 00:12:21,830 --> 00:12:25,480 David Price: on those fees. Just want to really support the community, 219 00:12:25,480 --> 00:12:28,760 David Price: getting back to business. And when you're coming out of 220 00:12:28,760 --> 00:12:32,190 David Price: lockdown, what you found with many businesses is they haven't 221 00:12:32,190 --> 00:12:36,280 David Price: been operating, they need to restock and resupply their entire 222 00:12:36,370 --> 00:12:40,010 David Price: business, there's big upfront costs. So, that's a perfect timing 223 00:12:40,340 --> 00:12:43,179 David Price: where you have all these big lumpy expenses upfront, but 224 00:12:43,179 --> 00:12:46,610 David Price: you don't have your revenue yet. BizPay alleviates that for 225 00:12:46,610 --> 00:12:49,400 David Price: you. So, you can stock up and then have those 226 00:12:49,400 --> 00:12:51,980 David Price: four months to pay it off. And over those four 227 00:12:51,980 --> 00:12:54,440 David Price: months, all your revenue comes back because you're getting back 228 00:12:54,450 --> 00:12:54,890 David Price: to business. 229 00:12:55,160 --> 00:12:58,839 Sean Aylmer: It's certainly a very, very interesting model and has given me something 230 00:12:58,840 --> 00:13:00,610 Sean Aylmer: to think about because I haven't thought a lot about that. But 231 00:13:00,610 --> 00:13:02,880 Sean Aylmer: David, thank you very much for talking to Fear and Greed. 232 00:13:03,450 --> 00:13:04,969 David Price: Thank you, very much for having me. 233 00:13:05,540 --> 00:13:09,120 Sean Aylmer: That was David Price, founder and CEO of BizPay. This 234 00:13:09,120 --> 00:13:11,240 Sean Aylmer: is a Fear and Greed Daily Interview. Join me every 235 00:13:11,240 --> 00:13:13,459 Sean Aylmer: morning for the full Fear and Greed podcast with all 236 00:13:13,460 --> 00:13:15,590 Sean Aylmer: the business news you need to know. I'm Sean Aylmer. 237 00:13:16,240 --> 00:13:16,900 Sean Aylmer: Enjoy your day.