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Simon Brown: We're talking with Craig Newborn, CEO of JustPayNow. Craig, thank you for taking the time today to discuss retail trends. It's been a tough time for consumers, but one trend you're probably noticing is that we're seeing a return to traditional brick-and-mortar stores, perhaps as pre-pandemic shopping trends return. I might go offline for a bit.
Craig Newborn: Yes, good morning, Simon. At PayJustNow, we've seen pre-COVID trends completely reversing, with backpooling actually arriving in early December over the past two months, and people slowly dropping out in January. I have noticed that we are returning to pre-coronavirus trends. .
Interestingly, we noted in February that small appliances were doing incredibly well, and I think that has to do with the level of offloading that we're seeing today. So, interestingly, things like microwave ovens work incredibly well.
Simon Brown: Sadly, you may be under stress due to load shedding. That may be the problem. You also mentioned that your data seems to suggest that deals around things like payroll and bonuses are probably doing better than Valentine's Day or Black Friday. In other words, we are constrained as consumers. I don't have the cash to spend on a random date in mid-February.
Craig Newborn: absolutely. So what we're finding is that by the time people can actually make that payment, the months of expenses add up quite heavily. In a “buy now, pay later” world, you have to pay the first third on the day of purchase. And that people are only spending that money on or near payday, which causes the behavior of actually having money in their account and making ends meet in case they don't get paid. we are paying attention to. It's the middle of the month when most South African consumers don't have the money for it.
Yes, spending is definitely moving from 'wants' to 'needs', with people actually having money in their accounts and credit cards that can be used with a tap at any point in the month. It definitely matches when you hold it. [which is] You'll see a big change here.
Simon Brown: I understand the point. The thing to keep in mind with credit cards is that at some point you'll reach your limit. The interest rate is also high.
Buy now, pay later – how big has it become in South Africa? This is a relatively new concept globally, and perhaps a bit new locally.
Craig Newborn: absolutely. We're gaining quite a bit of traction in the buy now, pay later space in South Africa. At this stage, the industry as a whole is a multi-billion rand-a-year business, and PayJustNow notes that it is still experiencing very high levels of growth.
Our growth rate is over 100% year-on-year and if you're looking to grow a R1-billion business into a R2-billion business in a year, this is kind of the growth trajectory for us at the moment. It is not an increase from 1 rand to 2 rand. It has grown from R1 billion to R2 billion.
Simon Brown: It's quite important.And how much is that in your sense – and this can be a difficult question to answer – consumers who are under pressure for convenience, perhaps not so much that they're using it simply because they can't afford it? would be using it for convenience [something now].
Craig Newborn: I think this is a very interesting question, and I'm noticing that there are definitely two types of customers at the moment.
There are definitely customers who need a product, need to split it up, and are making buy-now-pay-later decisions based on “I need this product now.” We usually find that it takes more time to make his second purchase with us. I think it's directly related to affordability and obviously to the fact that we're very responsible and don't charge interest or fees. So what you see is what you get from a price point of view.
And there are definitely customers who use it from a convenience standpoint. You no longer need to carry cards such as credit cards or debit cards when making transactions. This makes the online and in-store checkout process much simpler and faster, ensuring your purchases align with your cash flow. This is clearly a huge “buy now, pay later” benefit for consumers.
Simon Brown: Do you see a split in the demographics of different age groups? Are we looking at the younger side – and maybe that’s just my old bias –? [generations] Perhaps they can adapt to it faster and easier than older people?
Craig Newborn: That's actually the interesting part. We have actually seen the opposite. When we launched this business four years ago, we were a very young market entering the credit market. We are able to determine affordability for consumers who don't necessarily have credit records or financial institutions. So we're seeing a lot of younger customers come into the store.
Interestingly, the depth of our merchant base allows us to use this in over 8,000 locations. There is a point at which all customers must split their purchases. For me, it's a set of tires for my car. As an example, the tires are fitted with Tiger She wheels. No one wants to spend his R12,000 on a set of tires for their car, but his three payments of R4,000 seem much better and it fits my cash flow. , the tires will last for several years. So it works for me.
What we're seeing is that our customers are getting a little bit older because of that penetration and the understanding that they can actually use this to buy a new Apple MacBook product for work. . You can use it to make slightly larger purchases that you previously had to finance using credit.
Simon Brown: I also respect your opinion. Managing your personal cash flow is important.
Leave it as is. PayJustNow CEO, Craig Newborn, thank you for taking the time.
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