Buy now pay later company Laybuy has been hit with “prolonged, elevated credit and fraud losses” in its UK business since the start of the year, the company reported in an update yesterday.

The company had reported at the end of the December quarter that it expected an improvement in credit collections and a higher margin in the March quarter. Things have not gone to plan.

The company claims that its poor credit and fraud experience in the UK is “consistent with other BNPL market participants”. 

It said it has introduced new credit risk and fraud management tools and it has “deactivated” merchants attracting high levels of fraud. It has also appointed a new chief risk officer.

Laybuy made a loss of NZ$22.6 million in the six months to September, compared with a loss of NZ$26.4 million in the previous corresponding period. 

Income was NZ$21.2 million for the September half, compared with NZ$13.3 million in the previous corresponding period. 

Expenses rose 23.5 per cent to NZ$38.8 million. Included in that was a consumer receivables impairment expense of NZ$10 million – up from NZ$6.5 million in the previous corresponding period.

Cash outflow was NZ$28.6 million, compared with cash outflow of NZ$23.4 million previously.

The company had been aiming for a better performance in the March half but that looks unlikely now.