HomeChoice pivots to financial services as BNPL market accelerates

Over the past three years, HomeChoice International – traditionally a retailer in the home space – has successfully pivoted out of a declining retail environment to a point where 95% of the company’s interim profits come from its fintech division.

The company saw a 25% growth in operating profit in the six months to 30 June 2023, despite a disappointing performance in the retail business which was restricted by credit risk tightening and market challenges. 

In July, Stats SA reported a 1.4% year-on-year decline in retail sales in May, marking the sixth consecutive month of annual decline in sales volumes.

While the company’s retail sales were down 25.6% year on year, finance and other income moved up 5% on the back of interest rate increases over the past six months. However, the shining jewels in HomeChoice’s crown are undoubtedly Weaver Fintech and its buy-now-pay-later arm, PayJustNow. 

Weaver Fintech delivered a strong performance, with revenue up 29% to R872-million and operating profit up 44% to R295-million.

The Weaver Fintech division offers personal loans and insurance products digitally through insurance FinChoice, as well as digital payment solutions through PayJustNow.

In the first half of the 2023 financial year, the group disbursed R2.4-billion worth of loans and channelled R544-million worth of retail sales via PayJustNow.

Weaver Fintech has successfully grown its customer base six-fold since 2019 to 1.2 million, of which 97% are digitally engaged. Management says increased scale, high levels of repeat business and a larger share of wallet-per-customer are also delivering increasingly more profitable growth.

FinChoice’s MobiMoney digital wallet has paid out R4.8-billion since inception and now offers bill payments at 25,000 Zapper points of presence. The product is clearly paying off, with fee income accounting for 33% of Weaver Fintech’s revenue. Funeral and personal accident insurance grew by 29% year-on-year.

PayJustNow (PJN) is one of the more successful buy-now-pay-later models in the market, and unlike competitors that have copied an international model of taking payments every two weeks, PJN offers a three-payment model designed to fit in with monthly salary payments. 

The stressed South African consumer has responded well, with more than 900,000 customers in just over two years, and a 43% increase in the number of transactions in the six months to the end of June.

Other players in the BNPL market include Payflex, TymeBank and Mobicred. According to Ken Research, the South African BNPL market is expected to grow at a compound annual rate of 35% between now and 2027.

TDMC, a digital agency that has launched more than 200 e-commerce stores, says integrating BNPL payment options on their Shopify-driven sites has proven to be an essential part of their suggested strategy. The agency reports that more than 50% of their retail clients had opted to integrate PayJustNow as an additional payment platform alongside their usual channels.

“We see incorporating a BNPL solution as benefiting both consumers and retailers – retailers are able to cast their consumer net further than before, and since the credit parameters are far less repressive than traditional banking institutions, in turn, their basket values are rising,” says Cheryl Ingram, founder of TDMC.

“BNPL mechanisms also mean fewer consumers are being pushed into a debt trap – we think this payment option contributes to more responsible lending which is especially relevant in the South African retail landscape.” 

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