How can a company built on such a simple idea - pay for goods in four simple instalments at no cost - be worth so much money?
The service is essentially a digital version of the traditional "layby" sale with one key difference for Millennials - the instant gratification of receiving the goods immediately. The idea that Afterpay is worth more than Harvey Norman is"mindboggling" says retail billionaire Gerry Harvey."They took a very different view towards debt, and unlike me they start life with a lot of debt," says Eisen and they are cautious of perceived "debt traps" like credit cards.The business idea was to focus on a budgeting tool for relatively modest lifestyle purchases, but without having to pay for it.
"I don't have a lot of spare money each fortnight so pay later lets me buy things I can't really afford," said one woman interviewed by the Australian Securities and Investments Commission for itsBut there was still the suspicion that Afterpay operated through a loophole in the regulations covering consumer finance, and the question remained: What happens to a service based on instant gratification - and instant decisions on funding potential customers' purchases - if the...
More than 10 per cent of online sales in Australia are now funded through Afterpay and it claims to have attracted one in every four Millennials to its platform."If you look at Millennials as a demographic, they’re the most important demographic in the world today, and very soon they will represent half of all disposable income globally,” says Eisen.
Russell Zimmerman, head of the Australian Retailers Association , says it has quickly become a mainstay of the retail sector. In December, a UBS report attributed a boost in retail sales last year to the BNPL players like Afterpay and rival Zip. Its customers are also prevented from conducting any further business with the company until they make the outstanding payments.
"Given existing surcharges for some credit card transactions, merchants may in the future seek to introduce surcharges for buy now, pay later arrangements. The implications of this would need to be considered."
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