Yes I agree that it's a disincentive and it's unfortunate but APT will need to find another way, perhaps relying on the exclusion from the service option. The reliance on late fees as income is a red herring though. These things dont matter. All ASIC cares about is a high fee is obstensibly unfair.
A quick google search reveals a recent example of what I am talking about- ASIC hates fees and mentions % as a consideration:
Not difficult to see Afterpay's product being lumped in with Small Amount Credit Contracts and this ruling being extended to late fees. At best, the late fee will be capped. At worst capped and all previous late fees refunded.
APT Price at posting:
$5.46 Sentiment: Hold Disclosure: Held
