Afterpay: Not In Favour Of Industry-Wide Lending Checks Idea

  • Jan 09, 2019 AEDT
  • Team Kalkine
Afterpay: Not In Favour Of Industry-Wide Lending Checks Idea

Technology-driven payments company Afterpay Touch Group (ASX: APT) is a part of ‘buy now pay later’ industry and it is currently having more than 8,00,000 customers and over 6,000 retail merchants. Despite being in existence for less than four years and facing tough competition, the company is processing over 10% of all Australian online commerce. Several other companies like ZipPay, Certegy Ezi-Pay, Oxipay, BrightePay, and Openpay are offering similar services like Afterpay Tough Group and they are also the part of ‘buy now pay later’ industry. ZipPay is an interest-free payment solution provider which lets its customers pay later for their purchases. The ‘buy now pay later’ industry is growing rapidly in Australia which is why Australian Securities & Investments Committee (ASIC) conducted a review of this industry and found out that the arrangement of this industry is influencing the spending habits of consumers, especially younger consumers.

Despite noting that many customers enjoy using buy now pay later arrangements, ASIC recommended the extension of product intervention powers to all credit facilities like Afterpay Touch Group and ZipPay. Following the ASIC review, Afterpay supported the recommendation of extending the ASIC’s product intervention powers, but it showed resilience to the idea of responsible lending checks.

On the other hand, Afterpay’s biggest competitor, ZipPay supported the idea of industry-wide responsible lending checks and as per its Co-founder and Chief Operating Officer Mr. Peter Gray, the company open to a more limited regime. Mr. Gray told that the company is supporting the idea of verification, ID checks, and credit checks.

Recently, Afterpay’s Executive Chairman and Co-founder Mr. Anthony Eisen said that Afterpay is having distinctly different product offering and services and its business model is also fundamentally different. As Afterpay is fundamentally different from other participants of buy now pay later industry, it has rejected the idea of industry-wide responsible lending checks which ZipPay recently supported.

As per ASIC’s report, the number of users of ‘buy now pay later’ platform has increased five-fold from 400k to 2 million in the last two financial year with 60% of users aged between 18 to 34 years old.  Further, the number of transactions has also substantially increased from around 50k during April 2016 to 1.9 million in June 2018. As per the ASIC data, many users of buy now pay later platform have delayed bill payments or borrowed additional money due to the arrangement of buy now pay later industry. Further, this industry is growing at an exponential rate along with the risks associated with it; thus, this Industry remains an area of focus for ASIC.

We would now be understanding the past performance of the stock. The last traded price of Afterpay Touch Group was $13.60 per share. The market capitalization of Afterpay Touch Group stood at ~$3.09 Bn. In the time span of previous six months, the company’s stock has delivered the return of 28.59% while in the previous three months, it had given 21.22 percent of return with the 52-week high of $23.0 and a 52-week low of $5.260.

is a part of ‘buy now pay later’ industry and it is currently having more than 8,00,000 customers and over 6,000 retail merchants. Despite being in existence for less than four years and facing tough competition, the company is processing over 10% of all Australian online commerce. Several other companies like ZipPay, Certegy Ezi-Pay, Oxipay, BrightePay, and Openpay are offering similar services like Afterpay Tough Group and they are also the part of ‘buy now pay later’ industry. ZipPay is an interest-free payment solution provider which lets its customers pay later for their purchases. The ‘buy now pay later’ industry is growing rapidly in Australia which is why Australian Securities & Investments Committee (ASIC) conducted a review of this industry and found out that the arrangement of this industry is influencing the spending habits of consumers, especially younger consumers.

Despite noting that many customers enjoy using buy now pay later arrangements, ASIC recommended the extension of product intervention powers to all credit facilities like Afterpay Touch Group and ZipPay. Following the ASIC review, Afterpay supported the recommendation of extending the ASIC’s product intervention powers, but it showed resilience to the idea of responsible lending checks.

On the other hand, Afterpay’s biggest competitor, ZipPay supported the idea of industry-wide responsible lending checks and as per its Co-founder and Chief Operating Officer Mr. Peter Gray, the company open to a more limited regime. Mr. Gray told that the company is supporting the idea of verification, ID checks, and credit checks.

Recently, Afterpay’s Executive Chairman and Co-founder Mr. Anthony Eisen said that Afterpay is having distinctly different product offering and services and its business model is also fundamentally different. As Afterpay is fundamentally different from other participants of buy now pay later industry, it has rejected the idea of industry-wide responsible lending checks which ZipPay recently supported.

As per ASIC’s report, the number of users of ‘buy now pay later’ platform has increased five-fold from 400k to 2 million in the last two financial year with 60% of users aged between 18 to 34 years old.  Further, the number of transactions has also substantially increased from around 50k during April 2016 to 1.9 million in June 2018. As per the ASIC data, many users of buy now pay later platform have delayed bill payments or borrowed additional money due to the arrangement of buy now pay later industry. Further, this industry is growing at an exponential rate along with the risks associated with it; thus, this Industry remains an area of focus for ASIC.

We would now be understanding the past performance of the stock. The last traded price of Afterpay Touch Group was $13.60 per share. The market capitalization of Afterpay Touch Group stood at ~$3.09 Bn. In the time span of previous six months, the company’s stock has delivered the return of 28.59% while in the previous three months, it had given 21.22 percent of return with the 52-week high of $23.0 and a 52-week low of $5.260.


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