Buy now, pay later (BNPL) company Afterpay has pushed back against the Reserve Bank of Australia’s potential regulation of its fees. Afterpay claims it shouldn’t be considered as a payment system because of its smaller scale, and due to the fact that it must go head to head with large tech firms like Google and Facebook to provide leads for merchants, according to a report by The Sydney Morning Herald.
The regulation, which would get rid of a rule that doesn’t let retailers recoup costs by adding a surcharge to customers, could potentially harm the company’s business and revenue, as well as hurt innovation, it said.
Afterpay has a market capitalization of around $10 billion. A majority of its revenue comes from merchant fees, which comprise around 3 to 6 percent of transactions. Last year, the RBA said it could possibly take policy action over the issue, and this week consumer groups in the country said they support that move.
Afterpay CEO Anthony Eisen said the company should be seen as a sales and marketing company, more like Amazon or Google. He pointed out that Afterpay puts on various promotions, including the bi-annual Afterpay Day. Eisen also noted that the Afterpay online store directory saw 48 million referrals in the previous year, and that tech giants charged referral fees of between 10 and 15 percent.
“Afterpay’s unique characteristics and value proposition to merchants and consumers means it should not be considered a payment system,” Eisen said. “As a customer acquisition channel for merchants, Afterpay competes with large players such as Google and Facebook, and provides leads to merchants at a much lower cost.”
Eisen also made the point that the BNPL ecosphere is fairly new, and although it is growing, it still makes up less than 1 percent of the total payments economy.
Shares in Afterpay have doubled in the past year, but dropped 0.5 percent on the news.