That's a truly horrendous report but basically confirms...

That's a truly horrendous report but basically confirms everything I have been saying for the last 18 months.

Here are a few snippets.

Now a comprehensive report on the economics of the buy now, pay later sector, by consulting firm Quinlan & Associates, explains the deteriorating unit economics and predicts losses among players in Asia will exceed $US5 billion in three years.

Unless major changes are made, we anticipate that most BNPL providers in the [Asian] region will continue wearing losses indefinitely and forecast combined market losses to reach $US5.2 billion by the end of 2025, based on the industry’s current P&L trajectory,” says Benjamin Quinlan, CEO of Quinlan & Associates.

Zip will also confirm on Monday higher-than-expected bad debts had squeezed the ‘cash transaction margin’ to 2.1 per cent, down from 3 per cent in the second half of last year. It will report a cash EBTDA loss for the first-half of $108 million, much deeper than analysts had expected until last week, when it pre-released the numbers.

The Quinlan & Associates report explains the impact of rising bad debts. A credit loss of 1.5 per cent of sales translates to 30 per cent of revenue being lost to cover for credit loss. Losses could be exacerbated by competition, encouraging BNPL players to move down the credit curve to expand their user base, it suggests.

Mr Quinlan said the largest BNPL players in developed APAC markets suffer from an average credit loss of 1.5 per cent of sales, higher than average credit card delinquency rates of between 0.7 per cent and 1.2 per cent in developed countries in the region.