INTHEBLACK July 2020 - Page 17



F E AT U R E
// B U Y N O W, PAY L AT E R
THE BIG
BUSINESS
A M A J O R D I S R U P T O R O V E R T H E PAS T S E V E R A L Y E A R S , T H E B U Y N O W, PAY L AT E R
( B N P L ) I N D U S T RY H AS C H A L L E N G E D S T E R E O T Y P E S , D E F I E D E X P E C TAT I O N S , A N D
I S H E R E T O S TAY.
AT A
GLANCE
STORY CHRIS SHEEDY

Afterpay’s business
model is centred on
the importance of
consumer protection.

OF SMALL LOANS
F
or the BNPL industry, the past year
can be likened to a wild rollercoaster
ride, and no one has felt the highs
and the lows as sharply as market leader
Afterpay Holdings Ltd. (Afterpay).
Three years from its listing in May 2016,
the future looked bright for Afterpay. Its
stock was trading at A$25.7, and its market
capitalisation had risen from A$165 million
to just over A$6 billion. Then, in June 2019,
when Visa announced it was entering the
instalment payment solutions arena, some
began to predict the death of Afterpay and
other fast-growing but still young BNPL
brands. That day, the value of Afterpay
stock dropped 15 per cent in 30 minutes,
and far worse was yet to come.
During the COVID-19 market panic
in mid-March 2020, in a single session,
Afterpay lost A$1.47 billion of market
value, or 33 per cent, amid fears of bad
debt exposure caused by job losses and
widespread economic downturns. Having
traded at over A$40 in mid-February,
shares were languishing at less than A$9
in March.
The share price then soared back to
almost A$40 in May, when Chinese tech
giant Tencent Holdings Ltd, owner of
communications social media and payment
system WeChat, purchased a A$300 million
stake in Afterpay.
AN INSIDER’S PERSPECTIVE
When she was first approached by Afterpay
to take a leadership role, Christine Blyth CPA
was the CFO of a global professional
services consultancy. Initially, she thought
the BNPL business was a payday lender,
and was not overly enamoured with joining.
Then she did some research.
What Blyth discovered, she says, was
completely different to what she thought
the industry was all about.
A Roy Morgan report
says Australians under
the age of 35 make up
almost 56 per cent of
BNPL users, and those
over 50 make up just
14.2 per cent.

Credit card debt
today is down to
A$7 billion from
A$8 billion in 2007,
says the Roy
Morgan report.
“It wasn’t until I did a little bit of digging
that I realised this company was nothing
like what I thought it was, having read a
few media articles,” she says. “I looked at
the consumer protections, and there are
just so many of them.”
In fact, she says, Afterpay’s entire
business model has been built keeping
in mind the importance of consumer
protection.
“We make money off the merchants,”
explains Blyth, who is now Afterpay’s
global head of transformation. Afterpay
charges a commission on sales from
merchants in return for managing the
payment system. “If you go to Myer and
buy a pair of pants and you default on that
payment, we freeze you from being able
to further use the platform. We still have
to pay Myer for your pants, but we get no
money from you, and we don’t report you
to any third-party credit bureaus.
intheblack.com July 2020 23

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