Haha yeh can't say there is a blanket charge back average of 7% for cards? Depends entirely on the industry ( although I doubt none are as high as 7%) .... Pretty sure accounting firms who take credit cards probably experience little to no chargebacks while tradesmen who accept credit card payments from their fellow brickies experience notably higher bad debt.... hahaha
Now... looking at Afterpay, and in particular their late fees ... circa $6m... these make up more than 30% of their normal income ($17m)... which might look like a lovely revenue kicker, but in reality its just a ticking time bomb... which has already partially started to explode, as from what I can see somewhere between bad and doubtful debt expense, makes up between $5m-$8m... so it basically completely offsets all those late fees.
I also think looking at bad debts as a measure of TTV is completely misleading, as $5-8m as a percentage of $500m+ TTV may look somewhat immaterial, but considering TTV is not the companies true revenue figure, the only fair way to analyse bad debts, is as a percentage of the average exposure.
Considering this book has now ramped from $50m-$100m very quickly... the last delta of $50m has come at a huge cost of bad debts...and if each incremental $50m in book is equating to $5m-8m in bad debt, then this business is bound to implode when growth slows.
Real bad debt is probably higher than 10%... So if APT are using the " let us take care of the chargebacks" USP as a kicker, its going to end up with them holding a giant can of excrement that self detonates over time
It backs up both
@Mexicanandre ,
@AllFuelledUp and
@dubspec theory that quality of originated clients is low and that credit metrics are failing.
