We can do some really rough, back-of-the-envelope math...

We can do some really rough, back-of-the-envelope math here.

Blindly optimistic scenario: 2.6m households each turning over every 4.5 years means 570k rental applications per year. According to the article, typical rent is $529/house and $409/unit (wish I knew where to live so cheaply, or maybe I don't want to know). Let's call it $450 average weekly rent, with 4x rent as a bond. The article seems to indicate that it will/can also cover the first two weeks of rent which are typically paid at the same time, let's go with that - 6x$450 = $2700. If EML are collecting 100bps per Boony that's $27 a go. The entire market - capturing every bond transaction - would gross 570k * $27 = $15m.

More realistic: this is only in NSW at the moment, and there'll be red tape and palms to grease before it takes off anywhere else. Roughly a third of Australia's population is in NSW, so let's assume 190k rental applications per year. Of those, how many tenants would be interested in paying 5% fee to BNPL their bond? Who knows, but probably a decent chunk - let's assume half, so 95k applications per year. It's also reasonable to assume that those using BNPL for their bond are in the lower rental brackets but let's not go there. I will, however, drop the margin to 75bps as closer to the current GPR rate from EML (from memory), so $20 / pop. If all those people who might want to use the service opt in, we are looking at 95k * $20 = $1.9m. Note that this ignores likely competitors in this space, assuming this is a desirable product.

I would suggest that everything going well for Flexibond this might bring in $1m over the next few years, best case ramping up to >$1m per year. If it's a huge hit it could bring in multiple millions each year. I think this is yet another contract with yet more diversity for EML, increase the revenue flow, and have a finger in the pie in the event that it blows up.

One thing that I wonder about is what EMLs contracts with these partners look like. If they do blow up and start making huge revenues, they will be looking to reduce their payment processing bill. If EML don't have then stitched up for a nice long contract they are at risk of being bumped off a winning horse.