LayUp, a Cape Town-based startup brand has created a new solution to transform the lay-by payment system for South African consumers, and also decrease the rate at which debt and low-income individuals purchase items and pay for services without opting for a credit-based purchase.
The 4IR-tech startup launched the digital payment solution to reduce credit payment issues in South Africa, and to also aid customers in depositing money towards goods or services, once it is paid off, the consumers then receive access to said item or service.
The old-age lay-by system has reportedly resulted in huge administrative costs and high non-completion rates for both the retailers as well as the merchants possible which is why LayUp’s new payment tool targets improving that to aid finalization rates of up to 60% for businesses.
Andrew Katzwinkel, founder and CEO of LayUp explained in an official press release the enhancement of the completion rate and the access given to South Africa’s low-income market.
His words; “Through driving awareness of when payments are due and making payments easier and more convenient for consumers, our platform could improve completion rates up to 60% for businesses.
Currently, consumers need to be in-store to make their lay-by payments, with their ID, and worse, it needs to be the same store at which the purchase was made. Clearly, such conditions can lead to high drop-off rates.”
LayUp system
About 20.3-million credit-active consumers exist in SA with R1.4-trillion in local consumer debt. Low-income and middle-income earners are exempted from credit purchases as they lack a credit record.
Credit purchases raise the risk of merchants not getting payments. These setbacks caused by credit purchases spurred the launch of the digital lay-by app as a substitute payment solution for businesses.
Katzwinkel further explained that the system used by LayUp has minimal admin and cost-effective, He said:
“But where the traditional lay-by system means that merchants have to manually manage and monitor incremental amounts of money from multiple consumers, but LayUp’s technology removes the hassle and complexity.
This is through automating collections, refunds, cancellations, and settlements, which significantly reduces overall administrative costs, as the platform’s interface or API was built with an accompanying treasury system that allows payments to be reconciled immediately.”
How it works
The digitized lay-by app developed by South Africa digital distributor, LayUp encourages customers to secure their goods or services by activating their payment plan through the use of a small deposit as determined by the merchant.
The consumer has the freewill to opt for a payment period for the specified item. This flexibility in payments is subject to the perimeter’s set out by the merchant.
The flexibility of the payment plan connects with the app by communicating reminders for due payments. Payments can be made via in-store, credit card, or online, channels and avenues at any affiliated retailer.
The scheduled payments to merchants that secure the goods or services will bag no additional interest fee. The products will then be redeemed by the consumer after full payment of the total amount.
Market possibilities
LayUp was founded in 2019 and has reportedly surpassed R10-million in transactions so far.
The startup hopes to integrate into a large enterprise with a focus on using LayUp systems, for example, to save for medical procedures that include surgeries or cosmetic dentistry.
The cost-effective digital payment solution aims to increase the number of goods or services sold in a single purchase, giving that the LayUp merchants are expected to experience an increase in turnover as the value of the order increases.
Katzwinkel also gave insights about how LayUp can accelerate cash flow in South Africa’s untapped low-income market, noting that the basket size is indicative of how the growth potential is.
He said: “Not only that, with 30 million consumers currently locked out of the economy through the inability to access credit, by circumventing the need for a credit check, LayUp also offers businesses the potential to tap into South Africa’s underdeveloped low-income market. This represents potentially billions in transactions, opening access to new revenue streams for businesses.”
Featured Image: Andrew Katzwinkel, Founder/CEO, LayUp
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