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Why Openpay (ASX:OPY) shares surged 10% yesterday

Shares in buy-now-pay-later company Openpay Group Ltd (ASX: OPY) finished over 10% higher yesterday after releasing some more details around its US expansion.

Compared to some of the other BNPLs like Zip Co Limited (ASX: Z1P), Afterpay Limited (ASX: APT) and Sezzle Inc (ASX: SZL), Openpay targets higher value verticals like automotive, healthcare and home improvement.

Source: Rask Media 1-year share price chart

Funding for US expansion secured

Openpay’s launch in the US will be funded by a US$274.1 million revolving warehouse facility provided by Goldman Sachs and Atalaya Capital Management.

This funding more than triples its existing facilities and will help establish itself in the world’s largest BNPL market.

This is what Openpay’s Brian Shniderman said regarding the US expansion: “We are thrilled to work with Goldman Sachs and Atalaya who will now deliver the funding to enable our growth in the US at scale. We will begin distributing BNPL in large volumes through major ecosystem partnerships like payments processors, and merchant aggregators requiring significant funding

This is precisely what we shared as our plan with investors, and all part of our six Pillar Strategy. This facility is now set to grow our US business at a greater scale for the global company through this exciting US launch going live this month.”

Differentiated strategy

Openpay’s going after customers with much higher average transaction values compared to smaller ticket transactions that Zip and Afterpay target.

One of its target verticals is healthcare, a $219 billion industry in the US. Openpay has partnered with EzyVet, a provider of a leading practice management platform that has a 25% market share in the cloud software market.

This go-to-market strategy is clever. Rather than trying to sign up merchants individually, it partners with the practice software provider giving instant access to all merchants who use it. In the US, the veterinary market attracts higher average transaction values due to better medical technology and innovation, such as MRI and CT scans.

Openpay’s US launch has a lot of potential, but I’ll be sitting on the sidelines for now.

For more reading, click here to read: 2 ASX small cap shares I’d buy in October.

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Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
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