To get a feel of the likely bad debts, it would be prudent to...

To get a feel of the likely bad debts, it would be prudent to trial out a purchase using Afterpay and determine how likely a consumer can fall behind on its instalments.

Additionally, regarding your analysis, have you considered contacting the merchants how they view the Afterpay service?

I think what many people are missing about the valuation of AFY, is how merchants are integrated into their platform, the price placed on the integration, as well as the available retail data for analytics.

Regarding bad debts, there will generally be a proportion of write offs, and much of the risk is mitigated because of the payment model (4 x 14 days), which will quickly show up in the arrears reports.