It's quite interesting to read the full report by Grant...

It's quite interesting to read the full report by Grant Halverson, payments analyst and consultant. Grant is the one being quoted in all of the news articles floating around over the past few days.

If search for Roche McLean Consulting you'll find a few of their reports from the last few years which are well worth the read for a better understanding of the payments landscape. Most of the reports are focused on Australia as the reports appear to be commissioned by the government.

There's only a few small mentions about BNPL in these reports and they basically state that the industry has not become prolific enough to survive. It also says that the industry will likely reach consolidation phase at some point in the near future with 12 ASX listed BNPL companies being too many for Australia. Another interesting stat is a 1% increase in interest rates would at 28% to costs.

Z1P hasn't managed to negotiate as good a rate on its funding as APT which was interesting.

Humm and Latitude were existing finance businesses before adding BNPL services and they will likely remain after the consolidation period for those reasons. I found this highly relevant considering the IOU acquisition of ISDB giving it a 42% stake in a financial services company which diversifies the income for IOU and provides high quality customers.

While APT, Z1P and others position themselves as credit card replacements (likely to tackle their key demographic market) these services are at their core much more closely linked to an unsecured lender such as a CertigyEzy Pay. This unsecured market only makes up around 15% of transactions in Australia and BNPL makes up only a small portion of that.

The most talked about type of reform for BNPL products is that merchants should be able to pass on the fees. This was shot down originally and many suspect this came from a government directive so as to not stifle innovation. The idea of saving money for the consumer has also been discussed.

Another interesting point is that Mobile wallets, and new types of payment methods in Australia have had slow up take or have failed. However in Asian markets e-wallets and mobile payments have grown considerably.

Just some notes from the reports which have fueled a lot of the articles this week. One of the things that stood out to me was the financial services companies Humm and Latitude likely to survive because of the existing business coupled with BNPL. Reflecting back on the core services of iSentric being digital/mobile payments and then the addition of ISDB makes me wonder if these services combined with BNPL is as has been mentioned a few times, a way to offset losses/costs from BNPL. The lack of bad debts is another key point from the last quarterly. Is this because of the way the company operates? Are they being selective with clients? Is that the reason the app isn't working for some? The company did announce data from CTOS which would help identify credit worthiness of I remember correctly. There's been a lot of complaints about the way management has been operating the business yet reading this consultant reports it's becoming more clear that management have been avoiding a lot of this issues whether by intention or coincidence I'm unsure. Anyway, some interesting reading and I got a little too caught up with it.