Ann: October YTD trading update, page-178

Stefan, normally agree with a lot of points you raise.

However, think your overestimating the impact of this tap and pay feature. This feature is only available in store and for merchants that werent signed up to merchant agreements (therefore are all additional accretive revenue - obviously not at 4% but for some reason (e.g. Jb hifi being a major example) were not willing to sign up to higher merchant fee arrangement for the time being. margins are already being squeezed and i see APT dropping theres with incumbents like PP coming in rather than staying high - Z1p is simply getting in early an being customer obsessed for long term view. Yes its better with higher margins but short term pain for long term customer loyalty is the selling point.

Getting to your tap and go reduction of margins - from a behaviourial economic side of things, most of the 'big ticket' (e.g. 300 bucks +) are shifting to being bought online (from a standpoint - people who buy big ticket items aren't done on a whim or spur of moment in shops and easier/ efficient (not carrying a ps5 home when it can be delivered or furniture for the same reason to buy online). Most of these items id say are still being purchased through approved merchants (e.g. Gamestop or Amazon or Kogan or Fantastic Furntiture). The lower cost / daily items such as groceries will be used via the tap and pay function and will incur the lower margin. But on this note, groceries / coffees / transport will naturally carry a lower credit risk. Zips risk analytics will also be able to lock the customer / prevent the customer from making further spending (also a 1.5k limit) far quicker . Its also far harder to incur significant levels of debt through spending on low ticket items before zip can make adjustments or lock your account. So to answer this, id say lower margins can be sustained for these types of goods especially with account keeping fee subsidies.