Beforepay shares plunged 42 per cent upon listing on Monday, casting doubt on the long-term feasibility of pay-day lending.
has fallen from 6.9 per cent in December 2020 to 3.08 per cent in October last year, which Mr Twiss credited to an improved technology stack and increased data collection.“We’re also getting much larger data volumes which give us a clearer lending picture.”The heart of Beforepay’s business is its credit assessment algorithm, which uses a database of 500 million separate transactions to develop lending profiles.
Beforepay is not subject to the national credit code as it charges “service fees” instead of interest. As such, it and other pay-on-demand operators are not required to undertake the same customer reliability checks imposed on traditional lenders. According to the Beforepay prospectus for the year ended June 2021, the company booked a net loss after tax of $18.8 million, with a net operating cash outflow of $21 million.
Aside from Mr Ayoub and co-founder Dean Mao, who own 11.84 per cent and 9.7 per cent of Beforepay respectively, several escrowed investors lost money on Monday.