Tech disruptor revolutionises traditional lay-by system

Johannesburg – South African 4IR-tech startup LayUp has developed a revolutionary approach to lay-by payments, with the potential to improve completion rates up to 60% and open new revenue streams for SA business owners and merchants.

The traditional lay-by system has long represented an enormous headache for merchants and retailers, marked by high administrative costs and high non-completion rates. But through utilising new technologies, South African digital disruptor LayUp seeks to improve finalisation rates up to 60% for businesses, while opening access to South Africa’s untapped low-income market.

Latest Experian statistics indicate that there are currently 20.3 million credit-active consumers in South Africa with a staggering R1.4 trillion in outstanding local consumer debt, while 17.9% of loans are four months or more in arrears.


LayUp founder and CEO Andrew Katzwinkel noted that credit purchases increase the risk of non-payment for merchants.

Furthermore, they prevent many low- and middle-income earners with “thin” credit files or lacking a credit record from making purchases, while placing consumers who are already suffering at the risk of an additional financial burden and increased debt.

These issues prompted Katzwinkel to develop an innovative digitised approach to traditional lay-bys as an alternative payment solution for businesses.

Lay-bys offer consumers the option of making small, interest-free monthly payments towards a good or service, which is delivered once the total cost has been paid in full.

Significantly reduced admin cost and effort

“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,” Katzwinkel said.

“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.”

Lifting completion rates by up to 60%

Additionally, LayUp provides consumers with timely communications and reminders when a payment is due, and offers consumers omni-channel payment options, meaning that they can complete payments via credit card, online or in-store at any affiliated retailer – even potentially a local spaza shop.

“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,” he added.

Market extension through bigger baskets and an enlarged market

By offering a simple, cost-effective solution to consumers, Katzwinkel is hopeful that the basket size has the potential to grow as well. “We have seen average order value increasing by up to 25%, so merchants stand to see turnover rise significantly. If past experience is anything to go by, they could see turnover expand by up to 55%.”

“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.”

Since its launch just a year ago, LayUp has already processed over R10 million in transactions, and is being utilised by companies ranging from online ticketing company Howler and luxury lodge group Tintswalo Lodges to technology retailer Epic Deals and golf travel specialist store Flook. In addition, some large enterprise integrations are underway that will soon be live in the market.

However, he notes that the platform could be highly attractive for medical practices, which could offer clients the ability to use LayUp to save towards medical procedures such as elective surgeries or payments for cosmetic dentistry.

Win-win outcome

“We also see huge potential for the platform to replace larger enterprises’ traditional lay-by systems. We have built the LayUp system from scratch with a focus on its scalability, so we can easily meet the needs of any business ranging from small and medium enterprises to South Africa and Africa’s largest retailers.”

“It’s a win-win for businesses and consumers, avoiding debt and promoting sustainable economic behaviour for consumers, while simultaneously increasing completion rates and revenue for businesses, at minimal risk.”

Sunday World

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