SA 4IR startup LayUp creates unique payment solution

Cape Town-based startup, LayUp has created an innovative solution to the traditional lay-by payment system for consumers, decreasing the rate of debt and allowing low-income individuals to purchase goods and services without opting for a credit-based purchase. 

  SA 4IR-tech startup launches digital payment solution to alleviate credit payment issues in SA

The developed service allows consumers to deposit money towards goods or services and once it has been paid off, the consumers are provided with access to said item or service.

Tackling the old age lay-by system that has reportedly resulted in high administrative costs and high non-completion rates for both merchants and retailers, LayUp’s new payment tool aims to improve finalisation rates of up to 60% for businesses. 

In an official press release, Andrew Katzwinkel, founder and CEO of LayUp explains enhancing the completion rate and providing access to SA’s low-income market.

“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 initiated. Clearly, such conditions can lead to high drop-off rates.”

LayUp system

There are, reportedly 20.3-million credit-active consumers in SA with R1.4-trillion in local consumer debt. Low-income and middle-income earners are excluded from credit purchases as they lack a credit record. 

Credit purchases increase the risk of merchants not receiving payment. These challenges caused by credit purchases encouraged the launch of the digital lay-by app as an alternative payment solution for businesses. 

Katzwinkel explains that the system used by LayUp is less admin and cost-effective. 

“But where the traditional lay-by system means that merchants have to manually manage and monitor incremental amounts of money from multiple consumers, 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 and settled instantaneously.”

How does it work?

The digitised lay-by app developed by SA digital distributor, LayUp encourages customers to secure their goods or services by activating their payment plan by making a small deposit that is determined by the merchant. 

The consumer has the freedom to choose the payment period for the specified item. This flexibility in payments is subject to the perimeter’s set out by the merchant. 

The payment plan is flexible and connects to the app by communicating reminders for payments that are due. Payments can be made via credit card, online, or in-store at any affiliated retailer. 

The scheduled payments to merchants that secure the goods or services will have no additional interest fee. Products will be redeemed by the consumer after the total amount is paid in full. 

Market extension

Founded in 2019, LayUp has reportedly surpassed R10-million in transactions since inception. 

The startup aims to integrate into large enterprises in the future with a focus on using LayUp systems 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 during a single purchase. The rate at which goods and services are sold is known as the turnover. The LayUp merchants are expected to experience an increase in turnover as the order value increases. 

Katzwinkel explains that LayUp can accelerate cash flow in SA’s untapped low-income market and notes that the basket size indicates the growth potential.

“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.”

Read more: New Nigerian fintech to launch digital wallet platform
Read more: Africa: why digital payments are key to financial inclusion [Opinion] 

Featured Image: Andrew Katzwinkel, CEO of LayUp [supplied]