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Afterpay “extremely different” to payday loans: Chair



Anthony Eisen talks “The Afterpay Effect” at Melbourne’s Intersekt festival.

As fintechs descended on Melbourne for the three-day Intersekt festival, executive chairman and co-founder of one of Australia's most successful fintechs, Afterpay took the stage for the last talk of the first day. His talk centred on trust. Namely, how much of Afterpay's success is due to the fading trust of consumers with incumbent financial institutions and traditional credit products and how Afterpay has built a solid community of trust with its simple product structure.

"I believe The Afterpay Effect is a demonstration of what can actually happen when people in a financial relationship find a way to trust each other," said Eisen.

However, it was the threat of regulatory change in the "buy now, pay later" sector that had the audience interested. On 17 October, the Australian Senate voted to establish an inquiry into sectors that lay outside the traditional credit landscape. This included payday loans, rent-to-buy schemes and buy now, pay later services such as Afterpay.

The Consumer Action Law Centre dubbed some debt management providers included in the review as "debt vultures".

“Debt vultures advertise incessantly online and on TV promising a ‘life free from debt’. If you thought from watching the Royal Commission that the banks, insurers and superannuation companies have been ripping us off, they’ve got nothing on the unregulated debt management sector,” said Gerard Brody, CEO of Consumer Action.

However, Eisen welcomes the inquiry.

"We don’t think regulation is a bad thing, we think it’s a good thing [...] We’re very confident in our model and the way that we act, but if people come into an industry and they cause harm, the regulator should have a right to intervene in that," he said.

As for being lumped in with other credit products in this particular Senate review, Eisen believes an open dialogue is important.

"So we’ve been very open about that thought process and approach. The key thing for us is, how do you have the right approach and dialogue so we can properly explain why we are different? We are very different to traditional credit, we are extremely different to payday lending and other models in the market but that dialogue is really important so for us it really is about communication."

When asked whether he believes Afterpay would be made to be a credit provider as a result of the review, Eisen said the "writing is not on the wall" that everything will be put into one bucket.

"I think from the discussions we have had with regulators [...] that there is an understanding and a consciousness that some of the fintech innovation – in particular that the customers are warming to and that are different to traditional models – that a one size fits all isn’t the right approach because there are very clearly distinct differences there."

But whatever happens in the review, Eisen says there are always areas Afterpay can be improved for its customers.

"We've not as a company ever said to ourselves 'we are fantastic and we can’t do any better'. There are always opportunities to improve."

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