BNPL fintech Splitit saw its share price double on a Mastercard deal, before issuing a ‘clarification’

- June 18, 2020 3 MIN READ
Image: Splitit
Thursday was a very good day for ASX-listed buy-now-pay-later venture Splitit which, just before 11am, told the market it had “signed a multi-year agreement” with Mastercard “to accelerate the adoption of Splitit’s instalment solution around the world”.

The market was bullish for the Afterpay rival – itself hitting new record highs today before closing at $57.84 – and Splitit (ASX: SPT) ended the day up 108% at $1.375.

The Israeli fintech, headquartered in New York, listed on the ASX in January 2019, raising $12 million at 20 cents a share, so you can imagine there was some joy in sellers today.

Splitit’s BNPL model involves partnering with retailers so customers can pay in monthly instalments from an existing credit card.

The Mastercard deal was a major coup and Splitit CEO Brad Paterson said it was “a fantastic way to broaden the distribution of our solution, leveraging Mastercard’s incredible global reach, and build out a range of instalment services”.

The ASX announcement said Mastercard’s Payment Gateway Services (MPGS) and Application Programming Interface (API) technology “will enable a systemic, scalable way to offer Splitit’s instalment solution” and the partnership will also explore accelerated collaborations with Mastercard’s suite of instalment solution providers.

The partnership will see them launch pilots across three markets with plans to roll out globally.

“This partnership with Splitit will help to drive higher transaction volumes for businesses and deliver budgeting solutions in the moment consumers are seeking them,” said Zahir Khoja, Executive VP of Global Merchant Solutions and Partnerships at Mastercard.

The fintech said it couldn’t put a value on the deal: “Splitit is not able to determine the economic materiality of the partnership with Mastercard due to the contingent nature of results that may be generated”.

Nonetheless, investors, perhaps already giddy from the soaring share prices of other fintechs, leapt on Splitit stock to double its price, before the company issued a clarification at 6.37pm on Thursday, after market close.

The announcement’s headline was “Splitit Partners with Mastercard – Clarification”.

It read in part: “Splitit wishes to clarify that the Agreement is for an initial five (5) year term. Either party can terminate the Agreement at the end of the initial term by giving no less than six (6) months notice of non-renewal. Unless notice of non-renewal is given, the term will be automatically renewed for additional successive one (1) year terms unless and until either party provides notice of non-renewal at least ninety (90) days prior to the end of the then-current term or the Agreement is earlier terminated as provided under the Agreement. Other than for non-renewal of the term, the Agreement only provides for either party to terminate for cause or insolvency.”

One explanation for the inspiration behind that clarification can perhaps be found before Federal Court Justice Michael Lee.

ASX-listed delivery tech venture GetSwift is currently before Justice Lee, defending charges brought by the corporate regular ASIC over market announcements in 2017 that saw GetSwift’s share price double in just a few days.

The five-week trial got underway this week, with ASIC alleging GetSwift and its directors misled the market when it didn’t reveal customers were on trials and could walk away after 90 days in announcements that they’d signed up for up to three years. The regulator alleges GetSwift’s directors used the announcements to boost the company’s share price before a $75 million capital raise. The announcements included deals with the Commonwealth Bank and Amazon, among others, and at the time, the ASX suspended GetSwift shares after the Amazon announcement because it was too vague.

That did not happen to Splitit, which traded throughout the day, and Startup Daily does not suggest any comparison between the actions of the two tech companies. We simply draw attention to the importance of clarity in statements to the market about price sensitive deals with third parties.

But there was one more kicker on Splitit’s evening ASX clarification as a reminder of the importance of attention to detail when you’re a listed company.

The end of the release said: “This announcement has been approved and authorised to be given to ASX by [Thierry Denis, Alon Feit and [insert], Directors on the Board of Splitit.

[insert] sounds like a name Elon Musk would give his kids.