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  • Writer's pictureDonnelle Brooks

The Pitfalls of OpenPay: The latest victim in the fall of Buy Now, Pay Later

OpenPay, a renowned payment platform in the digital commerce landscape, claims to offer a range of benefits for both businesses and customers. However, beneath its glossy exterior lie pitfalls and concerns that deserve a critical examination. In this article, we delve into the drawbacks of OpenPay, highlighting aspects that demand careful consideration before engaging with this form of fast credit.

Buy now, pay later company Openpay has entered receivership and shut its platform after it was voluntarily suspended from the Australian Securities Exchange on Friday, the latest casualty in the troubled BNPL sector.


What is OpenPay?

OpenPay is a cutting-edge payment technology company that offers a diverse range of payment solutions, catering to both merchants and customers. It provides a seamless and secure platform that enables businesses to accept payments from customers and offers consumers the freedom to make purchases without constraints. Founded on principles of innovation and customer-centricity, OpenPay is setting new standards in the payments industry.

The Advantages of OpenPay

  1. Enhanced Customer Experience: OpenPay prioritizes user experience, offering a seamless and intuitive payment process. Customers can complete transactions quickly and securely, reducing cart abandonment rates and boosting conversion rates for businesses.

  2. Flexible Payment Options: One of the standout features of OpenPay is its versatility in payment options. Customers can choose from multiple payment methods, such as credit cards, bank transfers, and digital wallets, tailoring the payment process to suit their preferences.

  3. Interest-Free Installments: OpenPay stands out by offering interest-free installment plans, allowing customers to make purchases and pay for them over time. This benefit attracts more customers, especially for high-value purchases, while promoting responsible spending.

  4. Merchant Benefits: Businesses partnering with OpenPay benefit from reduced payment processing fees, simplified payment reconciliation, and improved cash flow. Additionally, the platform provides valuable customer insights and analytics, enabling better decision-making and marketing strategies.

  5. Secure Transactions: Security is paramount in the world of digital payments. OpenPay employs state-of-the-art encryption and tokenization techniques, ensuring that sensitive data is protected during transactions, thus safeguarding both customers and merchants.

How OpenPay Works

  1. Customer Initiated Payment: Customers select OpenPay as their preferred payment method during the checkout process on the merchant's website or at a physical store.

  2. Payment Options: Customers can choose from various payment options, including paying in full or opting for interest-free installments, which are tailored to their budget and preferences.

  3. Authorization and Processing: The payment information is securely transmitted to OpenPay, where it undergoes authorization and processing. Upon approval, the payment is completed, and the transaction is finalized.

  4. Payment Confirmation: Once the payment is successful, both the customer and the merchant receive confirmation of the completed transaction, ensuring a smooth and transparent process.

So, what happened to Openpay?

Seems great right? Like all Buy Now Pay Later platforms, it was a little good to be true. If you visit the Openpay website now, it is very much doom and gloom. It is simply a landing page informing customers that the platform is not open for new users, and existing users can only pay off their debts. So, why did it all go wrong for Open Pay?

Limited Adoption and Integration

While OpenPay boasts an impressive array of features, one significant drawback is its limited adoption and integration. Compared to more established payment gateways, OpenPay might not be supported by as many merchants or e-commerce platforms, leading to restricted options for consumers when making purchases. This lack of widespread adoption could result in a less-than-ideal user experience, with customers being forced to seek alternative payment methods.

High Merchant Fees

OpenPay's promise of reduced payment processing fees for merchants might not always hold true. In fact, some businesses have reported hidden charges and additional fees that can significantly impact their bottom line. This financial burden could make it challenging for smaller businesses to justify using OpenPay, especially when more cost-effective payment solutions are readily available in the market.

Credit Risks and Customer Defaults

One of the key features of OpenPay is its interest-free installment plans, enticing customers to make larger purchases without immediate financial repercussions. However, this also introduces credit risks for businesses, as customers could default on payments, leaving merchants with potential losses. While OpenPay claims to offer risk management tools, the risk of customer defaults remains a pressing concern for businesses that rely heavily on this payment method.

Customer Privacy and Data Security

The digital realm is fraught with security risks, and OpenPay's approach to customer privacy and data security raises valid concerns. Despite claims of robust encryption and tokenization, no payment platform is entirely immune to cyber threats. Any security breach could expose sensitive customer information, leading to severe reputational damage for both merchants and OpenPay.

Lack of Buyer Protections

Unlike traditional credit card payments, OpenPay might lack the buyer protection mechanisms provided by major credit card issuers. In case of disputes, customers may not enjoy the same level of safeguards, potentially leading to contentious situations where merchants and consumers disagree on refund or chargeback resolutions.

Complexity for Customers

While OpenPay aims to provide flexible payment options, the numerous choices and intricate terms might overwhelm customers, leading to confusion during the checkout process. This complexity could result in abandoned carts and frustrated shoppers, adversely affecting conversion rates for businesses that employ OpenPay as a payment option.

The Bottom Line

Despite its apparent advantages, OpenPay was not without its flaws and shortcomings. From limited adoption and high merchant fees to potential credit risks and data security concerns, businesses and customers found this payment platform did not work for them. While OpenPay may have suited certain businesses and customers seeking interest-free installment plans, it was not the ideal choice for everyone. As the digital payments landscape continues to evolve, thorough research and a critical evaluation of payment solutions like OpenPay are crucial to making informed decisions that best serve the interests of all stakeholders involved.

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