Laybuy Issues Receivership Notice

The sudden downfall of Laybuy, a major player in the buy now, pay later (BNPL) industry, has sent shockwaves through the sector. Since long, it had been preferred by many customers who wanted to pay for their purchases over a period of weeks.

It is particularly due to increasing financial pressure and tough economic conditions that they have now disclosed that Laybuy Group Holdings Limited, Laybuy Holdings Limited and Laybuy Australia Pty Limited are going into receivership, making both traders and purchasers uncertain.

The UK based entities and certain other entities in the Laybuy Group are not in receivership.

People who have payment plans with the company should look out for further communication from administrators or Laybuy concerning their accounts.

Equally, traders will be required to get new BNPL providers so that they can continue providing flexible payment choices meaning that they may also have to enter into fresh deals as well as make system adjustments.

This fall shows how exposed the entire BNPL market is and therefore stresses robust financial control measures, risk aversion strategies, and observance of regulatory standards.

Therefore, Laybuy’s receivership underscores significant hurdles within BNPL markets which call for caution among buyers, sellers and investors during transitions in this industry.

Elliot Reader, Senior Vice President at investment bank, Houlihan Lokey discusses his thoughts on the future viability of BNPL:

“The trajectory of the buy-now-pay-later market will be largely dependent on the level of regulation placed on the sector – a key discussion point between political parties at the moment, and a delicate balancing act between protecting consumers and providing them with access to suitable financial products.

Whilst there is a recognition that regulation will happen in some form, the format of it will decide whether BNPL in its current form will remain a viable product to offer in the UK. The current delays to regulation continue to create uncertainty for the sector, and when larger banks and institutions are making decisions on where to invest – this uncertainty creates challenges.

There is no doubt there is a consumer demand to service. However, 25% of UK BNPL users have been charged with late payment fees according to research by the Centre for Financial Capability, which indicates there is a need to either improve underwriting and affordability standards or educate borrowers on the potential implications and consequences of using such a product.

Fulfilling this consumer demand will remain an opportunity for lenders to be serviced through some form, but until the regulation is understood, it remains to be seen whether or not BNPL will sustain its popularity.”