Several Founders, Co-Founders, CXO Bankers, CXO Fintech professionals & people who participated in the ePanel discussions:
- Mr. Ravi Shankar, Co-Founder, and CEO, Active Intelligence Pte Ltd
- Mr. Muthu Krishnan, Director – Sales, Wibmo A Nasper’s/Pay U fintech company
- Mr. Srinath Vasudevan, Sr Manager Consumer Payments APAC, Amazon
- Mr. Vibhor Mundhada, Senior Vice President, Head of Merchant Acquiring, Strategic Alliances & Digital – Wallets & Initiatives at Mashreq Bank
- Mr. Roopesh Chandran, Director – Fintech, Processors and Business Excellence at Visa
- Mr. Piush Kothari, Head of Business Operation, Walt Disney Direct-to-Consumer & International
- Mr. Abhishek Arun, Chief Operating Officer, Paytm Payments Bank
- Ms. Aishwarya Jaishankar, Co-founder, Hyperface Technologies
- Mr. Neeraj Chandra, Head of Operations and Technology, India, Abu Dhabi Commercial Bank
- Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous
Out of the blue Square announced that it’s going to buy Afterpay for $29 billion as BNPL booms. Community member shares an update from the Financial Review of Joe Aston who says;
- Afterpay has never made profits
- Never paid dividend
- Afterpay has less than 1 billion in net assets
Also, the US stock markets have spoken;
What is going on? Isn’t something fundamentally incorrect? Aren’t these appearing to be suspicious transactions? Well, compare this with Zomato, what’s surprising?
- BNPL is becoming an important checkout option. Afterpay is already listed and as per reports, the transaction is a 30% premium to the price. With Square’s scale and therefore potential for accelerated growth, a 30% premium does not sound crazy (or suspicious). Though the base valuation does!
- Actually, for Square kind of player, this deal has more value to extract – it’s merchant network and for each transaction value range BNPL has business case.
Arguing the other way; [1]
- Look at the numbers/metrics. Interest-bearing credit card debt in Australia is down 1/3 in the last 3 years is a testament to their impact. 15% of all Aussie online apparel sales. User growth was 1,100% year-on-year and merchant growth was 75% in the latest quarter.
- Also, this is a stock deal and not cash, don’t just go by 29 billion $ in isolation.
- Not taking away anything from the BNPL model and the growth it has seen past the pandemic online surge and government doles, the market is crowding and margins under pressure with novelty turning norm
Let’s explore the BNPL space:
- Through BNPL customers can purchase and pay for it in installments at later date. BNPL is not regulated by FCA in the UK. You can do online shopping for non-essentials even though you have a credit card bill that you are unable to pay off. The worrying part is that it increases your debt easily and can become out of control.
- A reminder is sent by BNPL companies for the due payment but if the dates are missed, interest is not charged automatically. BNPL customers try to accommodate customers to pay the debt. But still, the debt is not paid then eventually the debt gets passed on to a debt collection agency
- No one knows how BNPL is going to make money, at least yet! Most of BNPL providers are using cards as a mode of collection of the EMIs, which itself is counterintuitive (you want alternate lending to cards).
- The space is crazy, one BNPL provider 1-year-old in UAE got sold for a valuation of USD 20 mln. Another provider, with zero customers (well almost) wants to raise money at USD 10 million.
- Member says, BNPL is the best and worst of credit cards, it comes with a free credit period but no interchange, transactional revenue is a big question mark. But guess it works well as an entry-level credit instrument in a market like ours.
A member who has just launched BNPL with a fintech, shares some thoughts regarding making money;
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