Openpay Group (OPY) CEO, Michael Eidel

Openpay Group (OPY) CEO, Michael Eidel speaks with Tom Piotrowski about the company's recent funding package , its US growth plans and how Openpay is differentiated from other BNPL players.

8 Apr 2021



[MUSIC PLAYING] TOM PIOTROWSKI: Thanks for joining us for the Executive Series. Today, I'm joined by Michael Eidel, who is the CEO of OpenPay.

MICHAEL EIDEL: Good morning, Tom.

TOM PIOTROWSKI: Michael, it's really good to see you again. It's been a while.

MICHAEL EIDEL: Likewise. Yeah.

TOM PIOTROWSKI: And in the period where we haven't spoken, you have been very busy. But what I'd like to hear from you is more along the lines of the dynamics that are driving the land grab if you like when it comes to Buy Now Pay Later type organisations. This is taking many different shapes and forms and I'm just interested in the sort of thinking that informs your strategy at the moment.

MICHAEL EIDEL: Yeah. Tom, I think that's a great question to start. And I think what we see now increasingly is really differentiation of the different models of Buy Now Pay Later. And what we very strongly focus on is a differentiated approach with regard to longer, larger, and customised payment plans.

Longer from a payment plan duration perspective up to two years, 24-month. Larger from a payment value perspective or plan value perspective up to $20,000. And I think a particular differentiation for us is to be able to kind of tailor make the plan for the needs of the merchant and the merchant very often are dental clinics, veterinary practises, car dealerships, institutions who offer education, sports clubs for sports memberships.

So this is where we can really in a way carve out a quite sizable niche for us to provide not only a very convenient payment service but also a useful payment service, which I believe is not given with all the providers which we see in other parts of the market in retail paying for instalments two-month very low kind of value if you like and kind of helping young people to afford tee shirts and tennis shoes, which we do not really believe is the right approach. So longer, larger, differentiated is a good approach for us to grow globally.

TOM PIOTROWSKI: I suppose often when organisations are spoken of they are regarded as the antagonists and the disruptors. But the way things are panning out now in terms of technology and given the incumbency of large organisations in this space it's easy for the disruptive to then become displaced. So does that help you in that dynamic as well?

MICHAEL EIDEL: I would put it that way. I think we can be disruptor within the space of disruptors, which is Buy Now Pay Later. I think we see an increasing commoditization of this lower value, short-term plans and the respective providers of paying for. And we all know the names. And we have recently also seen some of the incumbents in financial services like PayPal last year and the Commonwealth Bank themselves a few weeks ago to enter that space.

We believe this is very convenient, and it makes a lot of sense for a type of customer. Our audience, however is a bit of an older kind of type, people who are more finance savvy, and who probably want to use us more as a budgeting tool, as a reliable partner for important investments in their lifestyle, which is their health, their families, their pets health, which is the performance and safety of their car, which is their home, which is the education, which is the leisure kind of sports memberships.

We have entered a partnership with MSL Solutions last year, and we will not be through a technical integration again available at 400 golf clubs in Australia and to be able to help golf club members to spread the quite exorbitantly high golf membership fees over a long period of time, 135,000 people probably waiting for that solution. And this is where we believe we can disrupt this disruptors and not being only convenient, but useful for people to manage their cash flow smartly.

TOM PIOTROWSKI: We talk a lot about overseas markets. But how are things going closer to home in Australia?

MICHAEL EIDEL: Australia is going really well. We had obviously very challenging times as any other country around the globe with the economic impact of lockdowns. I think Australia has done a tremendous job not only to get this coronavirus under control. But also with government support and the banks coming in, I think a bit of overcoming the commercial impact and the economic impact for individuals very well with job keeper and job seeker.

So we have seen in our online business, particularly in higher value retail, an enormous growth in our home market. People are kind of changing their purchasing behaviours from in-store, for obvious reasons, to online. And we have lately seen again a strong pick up in the origination of plans in-store. Typically what I said before, dental treatments, veterinary treatments, car services, car maintenance, and other areas where we focus on where we had seen a bit of a flatter growth curve during the crisis if you like.

So these numbers have come back very, very nicely. We've seen our kind of very healthy growth, omnichannel online mostly in retail, also in-store with increasing trend again. And then very, very strong in our differentiating verticals mostly in-store, so a very healthy growth in our home market.

TOM PIOTROWSKI: As far as the capital raising that you recently completed, there was an enthusiastic take up of that. How are you planning on deploying that capital?

MICHAEL EIDEL: It was very encouraging for us to see the kind of oversubscription offer of this race in quite challenging market environments as we have kind of recorded lately. The use of funds will really focus very much on growth, and particularly in the US where we are now really working through our six pillar strategy, hiring the right people. We have already brought some very, very remarkable leaders in the US business across banking, retail, other verticals technology, and consulting to OpenPay.

So we have ticked that box very nicely. We are now working on further partnerships with kind of ecosystem owners like payment gateway providers but also at these large aggregators who bring us into a high number of merchant relationships. We're Americanising our technical platform, which is also a cost-intense effort, and we are creating kind of the US product now, designed by US merchants for US merchants.

So we have founded an OpenPay merchant advisory council with very reputable senior leaders in the US market creating the product for their business going forward. And I'm sure they will also not only design but use it further down the track, which is a great way to build relationships and acquire merchants. So this is where the money will go into the US.

We also have signed a global partnership with one of the leading veterinary software providers, ezyVet, who we have been partnering very successfully for many years in Australia. And we have now signed an extension of this agreement in Australia from Australia into the UK where we will launch first and then into the US as well. So another great opportunity for us to integrate and kind of be very capital efficient in how we acquire merchants and drive utilisation of our product in the UK as well as we pivot there from larger value retail into this verticals, as well.

And last but not least is also investment going into our B2B software-as-a-service platform. Woolworth, as you may remember from our last conversation, our first inaugural user of this exciting B2B product in Australia, then our onboarding hundreds and thousands of their business customers and sign up new ones. And this is all supported by our technology platform. And we are also working our full further capabilities on that software-as-a-service model to welcome other enterprise retailers, other enterprise merchants on this platform to grow B2B as well. That's really the purpose, where the money goes into.

TOM PIOTROWSKI: It's such a dynamic space in which you're operating at the moment, Michael. Unfortunately, we don't have enough time to talk about all of the elements today, but we look forward to more conversations in the future. Thanks very much for your time today.

MICHAEL EIDEL: A pleasure. Thanks Tom.

TOM PIOTROWSKI: And thanks very much for joining us for the Executive Series.

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