The APT Downramping genius, page-164

I agree that size will be an important consideration, but the actual decision taken by each merchant will be more nuanced. For merchants with low customer frequency, for example, integration may be optimal as it reduces payment friction. Omnichannel retailers will generate a host of other considerations, as will customer demographics, retail category, products sold and so on.

Amazon is such a beast that distinct dynamics are at play. Amazon want to own the customer - sign-up for an Amazon account, get your details and monetise you over time with Amazon prime etc. They want customers for life. When you integrate with Afterpay, the merchant is implicitly giving power to Afterpay (which owns the customer). However, this doesn't explain why Amazon Australia has integrated with Zip.

We remain in the early phase of BNPL. Merchants are still experimenting; therefore we should expect some churn and dis-integrations. BNPL providers are also experimenting and innovating.

1st innovation - Merchant integration
2nd innovation - Shop anywhere ghost card

Afterpay's affiliate model is a novel adaptation of the 2nd innovation rather than a distinct innovation in itself. They have looked at what the competition are doing, assessed that it has merits, considered how they can improve upon it and then launched (what we hope will be) a superior product.

I must confess that I still don't fully understand the underlying economics of the shop anywhere ghost card. For instance, if it is used at a retailer with no affiliate program, what revenue does the BNPL provider get beyond the minimal interchange fees and any directly imposed customer fees? Grateful to anybody that can shine further light on this.