The majority of Afterpay’s revenue comes for the “retailer” -...

The majority of Afterpay’s revenue comes for the “retailer” - not the users.

I keep hearing this but the flaw in this statement is that any cost to the retailer is ultimately borne by customers, absent an unusual desire by the business to go broke.

You can compare Afterpay to something like AMEX and consider how many retailers were willing to accept AMEX with their higher charges, vs VISA/Mastercard and EFTPOS.

Some retailers took the view that AMEX was worth accepting because that's what some customers wanted, largely due to the rewards scheme AMEX offered.

The RBA/ACCC blew that up with their recent changes to the way surcharges are applied and required transparency.

So if you look at the payment options today and the argument is that customers prefer Afterpay because it's "free" to them, and retailers like it because it drives incremental revenue, I wonder how it plays out for Afterpay in the medium-long term.

Ultimately it makes sense for /everyone/ to use Afterpay because it is "free" credit. In the long run that means Afterpay is no longer incremental revenue for a business if the majority of their customers have switched from VISA/MC to Afterpay. The costs of their VISA/MC transactions were 1%, and now they're paying Afterpay 6% for the same revenue.

The point of all this is to say that this argument that the revenue comes from the retailer, not the user, is only true in the short term.

That isn't to say there isn't money to be made by investors in the short term but it feels to me like we're playing musical chairs -- at what point does the reality of Afterpay's true cost catch up and retailers treat it as just another AMEX?

I'm already in the camp that if a retailer offers Afterpay I'll use it in preference to my credit cards. After all, if I'm not using Afterpay, every dollar I give to the shop is subsidising those who do.