Buy now pay later company Openpay launched its initial public offering this week, with a pitch to investors that there is plenty of opportunity for its differentiated product in an increasingly crowded market.

The company is offering 31.2 million shares at $1.60 a share to raise $50 million. At listing it will have a market capitalization of A$150 million.

The company claims that its payments technology, Openpay Live, facilitates “seamless, secure and swift payments between customers and merchants.”

Openpay was established in 2013. Its BNPL proposition allows consumers to split payments for in-store and online purchases into a series of payments, interest free. Plans can be for payments between $50 and $20,000, with payments over periods from two to 24 months.

Openpay says elements of its product offering that differentiate it from the competition include larger payment plan sizes and longer repayment terms, flexibility around the timing of the start of repayments and a deferred payment facility to help avoid late fees.

It also says that markets such as healthcare and automotive, where it focuses, are less competitive than retail.

Most of its merchant relationships are in Australia, with a smaller number in New Zealand. It started operations in the United Kingdom in June.

It has 1754 merchants in the three countries. Those merchants have used Openpay 318,000 times, involving 153,000 customers.

Between 2017 and 2019, the number of “active plans” increased at a compound annual growth rate of 112.4 per cent.

The company says the offer proceeds will be used primarily to fund working capital, investment in product development and staffing. A key focus will be expansion in the UK market.

The company’s revenue comes from merchant fees (a percentage of the transaction value), which contributed 51.8 per cent of revenue in 2018/19.

Customers pay “plan management fees” and, in some cases, establishment fees. Openpay also charges late payment fees. Customer fees apply in Australia but not in NZ or the UK, where they are not allowed.

The company estimates that in Australia BNPL customer numbers grew from 2.7 million in 2017/18 to 5.3 million in 2018/19, and transaction value grew from $3.3 billion to $6.6 billion over the same period.

On a pro forma basis, the company’s revenue grew from $6.8 million in 2017/18 to $11 million in 2018/19. Revenue was based on total transaction value, which rose from $27.7 million to $97.3 million. Average transaction value rose from $582 to $603.

The loss blew out from $6.9 million to $16.1 million, largely as a result of a big increase in employee benefits expense and other operating expenses. The receivables impairment expense rose from $1.2 million to $3 million.