- Shares in Afterpay reversed losses after yesterday’s slump on the news of a Senate inquiry.
- Today, the payment fintech backed regulation of buy-now-pay-later consumer lending.
- And says it supports a review by corporate regulator ASIC into the sector.
Payments fintech Afterpay, whose shares were hit hard after a Senate inquiry was formed to investigate consumer lenders not covered by the financial services royal commission, says it supports “appropriate regulation” and oversight by corporate regulator ASIC.
The company says its buy-now-pay-later model is different to traditional credit, a fact recognised by the New Zealand Government when it recently decided not to include products such as Afterpay in local credit regulations.
“Afterpay welcomes the opportunity to participate in any review to ensure an informed discussion takes place in an appropriate forum and that the differentiated nature of Afterpay’s service is clearly understood,” the company said on a statement.
The fintech is recording explosive growth and now has 2.3 million customer and 17,000 merchants using Afterpay. In its annual results posted in August, the company recorded revenue up 397% to $113.9 million and a loss of $9 million.
However, news of the Senate inquiry punished Afterpay’s share price. They dropped 18.93% yesterday to close at $11.35. The company listed on he ASX in May 2016 at $1 a share.
Today the shares headed higher, adding 14.1% to close at $12.95.
“Afterpay promotes responsible spending and offers customers a fundamentally different proposition to traditional credit products,” the company says.
“Our model is unique in that we provide a free service to customers if payments are made on time, we do not charge interest or monthly fees, our instalment periods are short, and if payments aren’t made on time we immediately suspend a customer’s account which means they will never be caught in revolving debt.
“The vast majority of our revenue is derived from fees paid by retailers and merchants which allows us to offer an interest-free product to consumers.
“The overwhelming majority of consumers pay on time and have never incurred a late fee.”
Afterpay says it support the review by corporate regulator ASIC into the buy-now-pay-later industry. Other players include Zip Pay.
In a recent submission to the Senate Economics Committee, ASIC said that companies such Afterpay do “not meet the definition of credit within the National Credit Code (NCC)”.
“In light of the regulator believing that Afterpay is not regulated by the NCC we have been working to find an appropriate regulatory solution,” says Afterpay.
Afterpay says it prepared a submission to the Senate Economics Committee before the announcement of the Senate inquiry was known, stating that the company supports extending ASIC’s intervention powers.
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