Festive sales lift Afterpay
AFTERPAY has added 12.98 per cent to its already soaring share price thanks to record December sales, but the Australian-based company is also defending its risk to consumers ahead of an appearance at an inquiry into buy-now, paylater vendors.
While Afterpay’s innovative payment platform saw its customer base surge in 2018 – including to one in four Australian millennials – the company said yesterday its business model was also a reason for leniency at the Senate Inquiry into Credit and Finan- cial Services, which holds its next public hearing in Brisbane next Tuesday.
Afterpay had previously backed the proposed Australian Securities and Investments Commission approach to have product intervention powers extended to the burgeoning buy-now, pay-later industry.
This sector has saddled shoppers with nearly $1 billion in debt in 2017/18.
But Afterpay, which is led by chairman Anthony Eisen (above), said its business model and in-built customer protections set it apart from other vendors. “Afterpay believes regulation should be proportionate to the protections and lower risk profiles associated with certain products, and that it should recognise and facilitate new business models and real-time decision making driven by innovative technology,” it said yesterday.
“We have spent considerable time talking directly with government, regulators, consumer advocacy groups, customers, merchants and shareholders about Afterpay and how it is different.”
Like other similar businesses, Afterpay allows consumers to buy an item immediately with a smaller up-front payment, and then pay the rest via intervals thereafter.
A late fee applies to missed payments, while Afterpay also charges retailers a percentage of each transaction. The company, which launched in Australia in mid-2015, was one of the best performers on the ASX in 2018, its share price more than doubling to $12.40 by the end of the year, though it cooled from an historic high of $21.13 in August.
Yesterday Afterpay shares closed 12.98 per cent higher at $16.10, after earlier announcing worldwide underlying sales in the six months to December 31 had exceeded $A2.2 billion, up from $918 million during the same period in 2017.
This success was mainly driven by the company’s expanding US footprint, which processed $260 million in underlying sales in the six months to December 31.