If they keep growing the way they are, I would be surprised if a bank doesnt buy them out.
Critics argue the business model's big weakness is that the 3.8 per cent fee it charges merchants will have to come down as the number of competitors offering cheaper fees grows.
In other words, Afterpay's business model has a narrow moat, because there's no complex technology, intellectual property or monopolistic market position to stop retailers or shoppers using alternatives.
and the 500kg gorilla usually wins.The competitor roll call is growing all the time, with Zip Pay, Humm, Sezzle, Splitit, Openpay, Brighte and CreditLine all offering similar services – often at the same online checkout points of retailers.
Perhaps a more serious competitive threat is the launch last month of Europe's largest payments and buy now, pay later player, Klarna, in Afterpay's home market of Australia.
Wish I was telepathic......Half for what the merchant is giving away to APT and the same again for them thinking I'm a mug
Seriously this post deserves a prize! Great call @Dona FerentesDefinitely a sector that splits opinions. Personally, if I see AfterPay or its ilk being pushed by a retailer, I'd ask for a 10% discount on 'any advertised price' as they say (not the RRP construct, either). Half for what the merchant is giving away to APT and the same again for them thinking I'm a mug.
Saw this somewhere: and the 500kg gorilla usually wins.
I agree, the problem I have with it is, it is just like layby except with layby you can go home and think about it and decide it was an impulsive buy and walk away, lose the $2 deposit.Seriously this post deserves a prize! Great call @Dona Ferentes
I cant get into the mind set of using APT or its ilk its just more debt it's not what people need right now. I prefer people owing me money not owing it to other people!
I have no problem with a provider of services or goods making a profit. In fact I'd prefer that to be the case. They'll be there next time if I wish to utilise them. I just don't like subsidising others' indulgencesWish I was telepathic...
So about the merchant thinking your a mug, is this a common occurrence?
What about online purchases, can you read the AI bots thoughts?
Does scowling work online as well?
All very interesting.
Merchants need to make a living also, not to mention pay employees.
You are spot on Dona IMO, the problem with afterpay, someone hastopay when it backs up.I have no problem with a provider of services or goods making a profit. In fact I'd prefer that to be the case. They'll be there next time if I wish to utilise them. I just don't like subsidising others' indulgences
All that has happened is it is a credit card by a different name. IMO
I think it will be spanked hard, sooner or later.
Exactly @sptrawler I remember buying my first surfboard on laybuy this is nothing new just an old idea digitised. It is a perfect system to take advantage of the me/now generations impulsivity but I cant see how extreme high private debt levels and a cooling in retail spending can be net positive for this. Yes I know they are expanding their customer base overseas but most western nations have the same high consumer debt problem. This is another momentum play in my opinion once the trend breaks this will be brought back to reality valuation wise in a flash.I agree, the problem I have with it is, it is just like layby except with layby you can go home and think about it and decide it was an impulsive buy and walk away, lose the $2 deposit.
With afterpay, you take it with you so there is no cooling off period, mugs game that will be shut down, when all the mugs get on 60 minutes IMO.
I could be wrong, and I've lost a lot of money not getting on board, but Australia has a habit of protecting the mug and punishing the supplier of the money.
Just look at the Banking Royal commission, it was the Banks fault for lending money to the dopes that provided dud information to get it.
The dope wasn't done for presenting fraudulent information.
Just my opinion.
Wont the same happen with afterpay, when people can't pay it off?Not an expert on the different Buy-Now-Pay-Later products. But with regards to the interest and fees you have to pay on credit cards if you miss the no-interest period, Afterpay may be favoured by those that have been burnt by credit cards and harassed by debt collectors.
Wont the same happen with afterpay, when people can't pay it off?
No as far as I could tell and Knobby22 made a comment with similar observation earlier.
Afterpay will stop the customer from further purchases as soon as they miss a payment. There is no interest on interest and outstanding debt and allowing the customer to continue to purchase and go deeper and deeper into debt spiral, which is the case with Credit Cards.
Another big difference is, there is no 19%+ interest charged from customers as with Credit Cards. Banks are still doing this (19%+ !!) in a near 0% interest rate environment and getting away with it despite all the Royal Commission mumbo jumbo. With a whole lot of lending products like Afterpay and it's competitors coming to the market, I wonder how long the oink's can keep squeezing the Cash Cow udders (@above19%pa) of the indebted population.
So once customers miss a payment they get barred from using the platform. With credit cards you get exorbitant interest added but you are only barred until your debt is paid off then once cleared you can keep using the facility therefore customer retention is higher in that regards compared to APT.
Im unsure on the process APT uses once a customer defaults as to how they can gain access to the platform again so that could be interesting. I believe customer retention for APT is currently very good but that could change, that and the default rate would be the obvious metrics to monitor.
Just my
As others have said, you should think of it more as a laybuy system rather than a credit card.
It's easier for the shop keeper. Those people who get all annoyed about it should think what layby costs the merchant.
And having our youth avoiding credit cards and the grasping banks is a good thing.
The default rate is an obvious metric to monitor. The longer Afterpay is in a market, the more the default rate drops as the bad users are winnowed from the system. If you miss your payment you get blocked. Once you pay it you can be back but you won't get your limit raised for a while. If you keep missing payments you will be banned.
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