• According to Afterpay, crypto could reduce merchant payment costs, according to a Senate inquiry

  • Afterpay, an Australian buy now pay later (BNPL) company, believes that using cryptocurrencies can help local merchants reduce payment costs.

    Afterpay stated in a submission to the Senate inquiry into “Australia as a Technology and Financial Center” that using blockchain-based transactions would reduce fees associated with traditional payment methods such as card issuer, network operator, and banking fees:

    “Merchants stand to benefit significantly from the cryptocurrency model, as card network fees are completely removed from the equation and the transaction costs are borne by the customer/payer.”

    The customer would bear the cost of validating the payment on the blockchain under the crypto model. Depending on which cryptocurrency and blockchain the transaction is conducted with, as well as how congested a network is at any given time, this could be relatively cheap or costly.

    Afterpay stated that if such a scenario occurred, transaction fees would be transparent, and customers would be given the option to “wait for more favorable network conditions and a lower cost” before making transactions.

    The inquiry is looking into a wide range of financial technology issues, including the economic and employment opportunities presented by crypto and blockchain technology, barriers to the adoption of new technologies, and the impact of corporate law “restraining new investment” in Australia. Later today, Afterpay will testify before a Senate committee (Sept. 8).

    While BNPL competitors Zip have announced plans to offer crypto trading services to customers in Australia and the United States, Afterpay has yet to announce any plans to work with digital assets. However, in a $29 billion stock deal announced on Aug. 1, crypto-friendly payments firm Square acquired Afterpay, which could see the firm enter the space in the future.

    Afterpay stated in its Senate submission that it “does not currently offer crypto-related products,” but that it is “actively considering” how innovative fintech features could function as a part of the alternative financial platform.

    Stablecoins in Australia

    Concerning stablecoins, Afterpay emphasized that the Australian government should collaborate with the crypto sector to determine what “framework an optimal environment for a AUD-backed stablecoin should look like.”

    According to Afterpay, the goal should be to provide stablecoin users with asset protection while also regulating it in a way that does not stifle fintech innovation in Australia.

    “This includes determining whether regulatory instruments are required for stablecoin issuers to have transparent and adequate prudential reserve holdings, consumer-focused data protections, and fair and appealing processes in place for account blacklisting,” it said.

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