1、The Economic Impact of Buy Now Pay Later in AustraliaJune 2022The Economic Impact of Buy Now Pay Later in AustraliaPage 3This content is provided for general information purposes.The analysis it contains was commissioned by the Australian Finance Industry(AFIA).Views and opinions expressed in this r
2、eport are based on AFIAs knowledge and understanding of its BNPL members area of business,markets and technology.AFIA does not provide legal,regulatory or other advice,and this report does not constitute advice of any nature.While the information in this document has been prepared in good faith,AFIA
3、 disclaims,to the fullest extent permitted by applicable law,any and all liability for the accuracy and completeness of the information in this document and for any acts or omissions made based on such information.Opinions expressed herein are subject to change without notice.No part of this documen
4、t may be reproduced in any manner without the written permission of AFIA.This document refers to marks owned by third parties.All such third-party marks are the property of their respective owners.No sponsorship,endorsement or approval of this content by the owners of such marks is intended,expresse
5、d or implied.All figures in this report are stated in Australian Dollars(A$)unless otherwise indicated.Front cover image:bogdandimages/Table of ContentsAFIA BNPL Code SignatoriesForeword 4Executive Summary 6BNPL is a rapidly growing option in the payments ecosystem 11BNPL is becoming a leading payme
6、nts choice for some consumers 24BNPL is supporting the growth of Australian businesses 36BNPL makes a significant contribution to GDP and jobs in Australia 50Methodology 54Smoooth paymentsKaren_Remez/The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in Aus
7、traliaPage 5Page 4The way we purchase goods and services,manage our money,and transact across our economy has fundamentally changed over the past few years.The COVID-19 global pandemic did not cause these changes,but in many ways fast-tracked them,and rapidly advanced the evolution of our digital ec
8、onomy.Digitisation will only keep accelerating.Emerging and evolving technologies are creating opportunities for disruptive business models and new product and service offerings.Customers want simple,fast,frictionless ways of paying for their goods and services.Businesses want more value from e-comm
9、erce solutions.Regulators globally are realising traditional finance and credit products need re-evaluation to determine how best to provide proportionate,scalable and targeted regulatory frameworks that balance payments innovation,consumer choice,flexibility and interoperability,while delivering hi
10、gh standards of consumer protection.Governments globally are realising the importance of payments and financial services efficiency to economic growth,financial wellbeing and social participation.AFIA recognises innovation,competition,market efficiency,economic growth and consumer protection are int
11、errelated and,therefore,must be addressed collectively.An informed understanding of the Buy Now Pay Later(BNPL)sector is critical to ensuring we identify appropriate responses that will create the conditions for a payments and financial services ecosystem fit for the future.Our research demonstrates
12、 the BNPL sector provides benefits to consumers,businesses,and our economy.Choice is definitely the greatest benefit choice for businesses in terms of the payment options they can provide their customers and how they elect to operate their business,and choice for consumers in how and when and at wha
13、t cost they can pay for their goods and services.However,like many things in life,there are complexities within the aggregated results,and the benefits at a system-level may not always be the experience at an individual level.From the beginning,the BNPL sector has worked hard to meet emerging commun
14、ity expectations,and the development of AFIAs BNPL Code of Practice is evidence of this customer focus.The consumer protections in the BNPL Code include upfront and ongoing suitability checks,product features to restrict further use if a payment is missed,product limitations to prohibit use for cert
15、ain goods and services that if misused could be harmful such as gambling services or firearms,and support for customers experiencing financial difficulties,including access to external dispute resolution if a complaint cannot be resolved by the BNPL provider and hardship arrangements.I would like to
16、 thank our research partners RFI Global and BIS Oxford Economics for their skill,knowledge,energy and hard work,which has enabled us to create this report.Thank you also to our Code signatories,without their input we would not have been able to deliver the depth of insight available in this report.A
17、FIAs purpose is to champion a thriving finance industry into the future,always acting in the interests of customers and communities.To succeed,we must work collaboratively with our members and stakeholders and we must be forward thinking,so the problems we solve and the innovations we make today mak
18、e sense for tomorrow.I hope our research provides a basis for a more informed understanding of the BNPL sector and its contribution to our economy and society.Along with feedback from consumers and businesses as well as their representatives,the results of our research will importantly inform the BN
19、PL sector about what further action may be needed to ensure the BNPL Code continues to be world-first and world-class.Diane Tate Chief Executive Officer,Australian Finance Industry AssociationForewordThe Economic Impact of Buy Now Pay Later in AustraliaPage 7Page 6Executive SummaryExecutive SummaryT
20、he payments sector is undergoing rapid evolution with the continued growth of e-commerce,digital payment technologies and changing consumer behaviour accelerated by the COVID-19 global pandemic.This includes a shift in consumer preferences away from traditional credit options and towards alternative
21、 products that offer convenience,interest-free finance and better cashflow management opportunities.1 RFI Global,Australian Payments Diary,Base:All transactions(2021:n=12,973)2 Ibid.BNPL enables mostly small,short-term purchases,most commonly repaid in interest-free instalments,or larger purchases s
22、uch as solar systems or other home improvements.This means that a consumer can purchase goods or services without paying the full value upfront and with no interest charges if repayments are made on time.Merchants benefit from offering BNPL through the introduction of new customers,increased revenue
23、 and decreased operating costs.BNPL is a competitive sector,evidenced by the presence of low barriers to entry,low switching costs,available substitutes,and declining merchant fees.Over the past few years,the nascent sector has experienced impressive growth,as both consumers and merchants have reali
24、sed its benefits and incorporated it into the payments ecosystem.In 2021 BNPL transactions represented 0.74 percent of consumer purchases in Australia by volume and 1.22 percent by value.1 The online focus of BNPL transactions is evident with BNPL representing 3.71 percent of consumer online payment
25、s by volume and 2.12 percent of online payments by value in 2021.2Consumer and merchant confidence in BNPL has been supported by the launch on 1 March 2021 of a Code of Practice(the Code)by the eight leading BNPL providers in conjunction with the Australian Finance Industry Association(AFIA).This se
26、lf-regulatory framework acts as a valuable model for overseas markets given Australias early innovation in,and adoption of,BNPL.The economic impact of BNPL BIS Oxford Economics has used two separate approaches to measure the economic impact of BNPL for Australia.Firstly,using economic contribution m
27、etrics,BIS Oxford Economics measured the role of BNPL in supporting national employment and GDP.In FY21,allowing for flow-on effects,BNPL helped create or retain some 99,200 jobs throughout Australia and contributed$14.3 billion in Gross Domestic Product(GDP)to the Australian economy.Secondly,using
28、a welfare economics approach,BIS Oxford Economics measured the combined consumer and merchant surplus benefits,or net social surplus.Here BNPL provides a good illustration of revealed preference in that merchants and consumers have continued to adopt it precisely because it provides advantages to ot
29、her payment alternatives and the benefits calculated in this report reflect this.Using these metrics,and after allowing for costs,BNPL has an overall net positive impact to the Australian economy in FY21 of$1.256 billion driven by:Credit card and other interest and fee savings andbudgeting benefits
30、to consumers.Growth in revenue and associated profitsformerchants.Cost efficiencies for merchants.Consumer benefitsThe BNPL payments model provides consumers with several key benefits,including consumption smoothing,budgeting support,a convenient lower cost alternative to traditional credit and acce
31、ss to online store directories.As a result,the number of BNPL users in Australia with active accounts has grown,reaching approximately 5.9 million active accounts in the period 1 July 2021 to 30 September 20213,responsible for more than$11.9 billion in transactions in the FY21 period.4 It is estimat
32、ed BNPL users in Australia gained$264 million in gross benefits from using BNPL services in FY21 and$68 million in net benefits after subtracting account fees,administration fees,late fees,net consumer loss from other sources and other costs.These benefits were driven by savings in interest and fee
33、costs(relative to credit cards),surcharge savings and the benefits to consumers of delaying payment,allowing for more effective budgeting and providing a better reflection of consumer preferences.Merchant benefitsAs at 30 June 2021,BNPL was accepted by more than 135,400 Australian businesses,5 helpi
34、ng them to generate new revenue,gain deeper insights and a better understanding of customer preferences and transaction activity,and decrease operating costs-with small businesses gaining greater benefit from BNPL.BIS Oxford Economics has calculated BNPL delivered nearly$2.8 billion in gross benefit
35、s to merchants from using BNPL services in FY21 and nearly$1.2 billion in net benefits.This included creating$2.1 billion in new revenue for merchants through new customer acquisition,increased basket sizes and increased customer satisfaction and retention.In addition,merchants accepting BNPL enjoye
36、d$626 million in cost efficiencies in FY21 from lower customer acquisition and service costs,lower fraud rates and lower marketing costs.3 Data provided to AFIA for the Code Compliance Committee by the eight Code signatories.Active accounts are defined as those accounts where the customer has made a
37、t least one transaction over the past 12months.4 AFIA BNPL Provider Data collected by survey by BIS Oxford Economics,January 20225 Data provided to AFIA for the Code Compliance Committee by the eight Code signatories,for the period ending 30 June 2021.High level methodologyThis exercise to estimate
38、the full economic impact of BNPL in Australia considered the FY21 period only and uses data points on how BNPL affects consumers as well as businesses and any increases in merchant revenue and employment and the flow-on effects of BNPL to the wider economy.The exercise entailed:Quantitative surveys
39、of over 2,750 consumers andover 700 merchants conducted by RFI Global acrossDecember,January and February 2022;Data collation from the RFI Australian PaymentsDiary which in 2021 and 2022 surveyed almost13,000 consumers;Data collection from the eight BNPL Code signatories;In-depth interviews conducte
40、d with consumers andmerchants using any types of BNPL to understandhow they engage with BNPL and the positiveand negative impacts for them or their businessrespectively;and Economic modelling conducted by BIS OxfordEconomics of the direct and flow-on effect of BNPL,leveraging the survey output,BNPL
41、providersproprietary information collected in January andFebruary 2022 in association with AFIA and publicinformation.The Economic Impact of BNPL in AustraliaSummary of findingsFY21ConsumersMerchantsData is for the FY21 or CY21 periods and in A$unless otherwise specified.Please refer to the Economic
42、 Impact of BNPL in Australia Report,June 2022,for details.Net estimated economic welfare benefits attributed to BNPL were$1.26billion,with consumers realising net benefits of$68 million by making purchases with BNPL,and merchants offering BNPL gaining$1.19 billion in net benefits by offering BNPL.Ac
43、tive accounts in AustraliaThe average increase in revenue,equivalent to 5.6%,across all merchantsBegan accepting BNPL to improve customer convenienceThe average revenue reduction predicted by merchants if they stopped offering BNPLValue of transactions Share of total transactions under the Australia
44、n payments systemAverage transaction valueAverage BNPL usage per annumPrefer BNPL over credit cards because they pay no interestSay BNPL helps them manage their cashflowOf active accounts were in hardship on 30 June 2021Of active accounts were the subject of EDR complaints to AFCA1 in 23 went withou
45、t essentials to make BNPL repayments*1 in 14 cut back on essentials to make BNPL repayments*Say revenue would fall if they stopped offering BNPLBegan accepting BNPL to win new businessBNPL-accepting merchantsNet new revenue generated by BNPLThe average increase in revenue for small businesses from B
46、NPLSay customers now expect them to offer BNPLAgree BNPL is here to stay5.9m82%78%57%54%24%60%0.48%54%54%0.34%0.01%4.4%7.3%$11.9b$15116.6 135,400$2.13b$18,576$25,880Every$1 millionof consumer spending using BNPL results in$11.9 billionof consumer spending using BNPL results in 8.3 jobs annual employ
47、ment99,200 jobs annual employment$1.2 million in Australian GDP$14.3 billion in Australian GDP*The definition of essentials is unique to each individual and changes with age and over time.The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 1
48、1Page 10BNPL is a rapidly growing option in the payments ecosystem38%As of March 2022,38%of Australians had used BNPL at least once694%Of Australians are aware of at least one BNPL provider75.9 millionActive BNPL accounts in Australia86 RFI Global Australian BNPL Council,March 20227 Survey work cond
49、ucted by RFI Global Australian BNPL Council,December 2021.Base:All consumers(Mar-17:n=2,014.Nov-17:n=2,049,Mar-18:n=2,005,Jul-18:n=2,003,Nov-18:n=2,008,Mar-19:n=2,055,Jul-19:n=2,014,Nov-19:n=2,015,Mar-20:n=2,006,Jul-20:n=2,016,Nov-20:n=2,105,Mar-21:n=2,034,Jun-21:n=2,045,Sep-21:n=2,045,Nov-21:1,002,
50、Mar-22:n=1008)8 Data provided to AFIA for the Code Compliance Committee by the eight Code signatories.Active accounts are defined as those accounts where the customer has made at least one transaction over the past 12months.9 Reserve Bank of Australia(RBA),C1 Credit and Charge Cards Seasonally Adjus
51、ted,released 9 May 2022,excludes commercial cards.Year-on-year change is March 2021 to March 2022,change from 2 years ago is March 2020 to March 2022.10 Reserve Bank of Australia,Payments System Board Annual Report,2021,pp.22-24.BNPL is an example of Australian innovationThe Australian payments indu
52、stry has been fertile ground for the introduction of new technologies in recent years.The use of traditional payments,such as cash or cheques has been steadily declining,as has credit card usage.Reserve Bank data for the period March 2021 to March 2022 shows a 2.0 percent decrease in the number of p
53、ersonal credit card accounts to 12.39 million compared to the prior corresponding period and a 9.2 percent decrease from two years ago.9 Users have transitioned to digital payment methods,such as cards,account-to-account transfers,and online payment providers.Reserve Bank data showed consumer use of
54、 mobile wallets is growing strongly,accounting for 8 percent of in-person card transactions in 2019.10 The COVID-19 global pandemic has accelerated this trend.New payment services have arisen,driven by rapid changes in technology and consumer expectations of better,more secure,and faster ways of exe
55、cuting payments.BNPL originated in Australia and provides benefits to both consumers and merchants.It is a payment solution allowing consumers to pay for things they want and need over time using their own money,and a way for merchants to benefit from cashflow smoothing,new customer acquisition and
56、increased revenue,amongst other services.BNPL is unlike credit cards,where the benefits of additional services,including loyalty points,mainly accrue to the consumer,in that it delivers significant benefits to merchants.BNPL is not payday lending or online wage or salary advance products.These produ
57、cts are not used to facilitate specific transactions for the purchase of goods or services and do not involve a contract between the merchant and the finance provider.These products also have high fees and/or interest rates.For the avoidance of doubt,the following are not considered a BNPL product e
58、ven if they are marketed or described as such:products or services offered to persons or strata corporations that are predominantly for a purpose that is not a consumer purpose;personal loans,mortgages or consumer leases;short term borrowing where a pay day lender typically provides small cash loans
59、 to individuals that are repaid at their next pay date;or any earned wage or salary access Max kegfire/The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 13Page 12arrangement,where a lender has an arrangement with an employer to give an emp
60、loyee access to an amount they have earned during a pay period in advance of the normal payment date.BNPL is similar to the lay-by instalment payments traditionally offered at the point of sale by retailers in the past.However,these lay-by services were offered by the retailer and the transaction an
61、d financial risk were carried by that retailer.BNPL enables small,short-term purchases as well as some larger purchases,such as solar power systems,white goods,medical and education services,and home improvements over longer terms,and is most commonly repaid in interest-free instalments.However,unli
62、ke traditional lay-by services,a BNPL user receives their purchase immediately and the merchant is paid up front by the BNPL provider.This means that consumers can purchase goods or services or install a solar power system without paying the full value upfront and with no interest charges if repayme
63、nts are made on time.In most cases,customers use a mobile app to access these services with repayments drawn from a customers linked debit card,bank account orless frequently,other payment methods,such as a credit card.11 Data provided to AFIA for the BNPL Code Compliance Committee by the eight Code
64、 signatories,January 2022.12 ABS,National,State and Territory Population,September 2021,released March 2022.See https:/www.abs.gov.au/statistics/people/population/national-state-and-territory-population/latest-release 13 RFI Global Australian BNPL Council,March 2022The advantages of avoiding interes
65、t payments and/or delaying immediate cash payment has tangible benefits to cost and budget-conscious consumers that other forms of payments do not offer.The advantages of incremental sales,increased average order values,the ability to attract new customers,the provision of marketing support,reduced
66、fraud and bad debt has tangible benefits for merchants that other forms of payments do not offer.The evolution of the BNPL sector should be viewed within this context.BNPL has become a highly valuable tool to both consumers and merchants,and a viable alternative to traditional payments products in t
67、he highly competitive payments ecosystem.Australia has led the way globally in BNPL payment adoption.There were approximately 5.9 million active accounts in the period 1 July 2021 to 30 September 2021,11 at which time the population of Australia aged between 18 and 89 years totalled 19.8 million peo
68、ple.12 It should be noted the number of individual BNPL customers will be lower than 5.9 million because some people have an active account with more than one BNPL provider.RFI Global research shows the proportion of adult Australians who have used BNPL increased from 32 percent in March 2021 to 38
69、percent in March 2022.13Figure 1:BNPL enables purchases,most commonly repaid in interest-free instalments,without securityPotential cost to customer(indicative range of equivalent annual interest rate as at June 2022)Line of CreditIncluding overdrafts and credit cards*BNPLOther unsecured creditPerso
70、nal loanIncluding retail,specialised finance and P2P marketplacesPayday lenders,wage advance,consumer leasingInstalment payments with interestCash paymentIn-housepurchase plansBNPL*Interest-free periods may be offeredHigh interestup to 48%Low interest510%No interest0%1525%10%$100$500$2,500$30,000Siz
71、e of purchase and term of loanConsumers are becoming more conscious about managing their money14 The Melbourne Institute of Applied Economic and Social Research and The Commonwealth Bank of Australia,Australian Consumer Financial Wellbeing Report,Quarterly Update,December 2021 15 Ibid16 Reserve Bank
72、 of Australia,Statement on Monetary Policy,February 202217 Reserve Bank of Australia,C1 Credit and Charge Cards Seasonally Adjusted,released 9 May 2022,monthly,excludes commercial cardsThe financial position of Australian households improved over the 12 months to March 2021,during which Australians
73、financial wellbeing increased by 7.8 percent to a new record score of 51.1(on a scale of 0 to 100)marking the highest level and largest year-on-year increase recorded since 2017.14The continued high level of financial wellbeing is due partly to accumulated saving balances that remain elevated compar
74、ed to pre-pandemic levels with the median savings balance in December 2021 being 42 per cent higher than December 2019.15 The Reserve Bank of Australia estimates total additional household savings during the COVID-19 global pandemic amounted to more than$200 billion.16The increased level of househol
75、d savings represents action by Australians to manage the current economic situation,including COVID-19 related uncertainties,rising inflation and speculation about rising interest rates.Without doubt,government fiscal stimulus,subsidies and support initiatives have cushioned the worst impacts of the
76、 economic downturn caused by the COVID-19 global pandemic.Australians took the opportunity to pay down almost one third of their combined average credit card debt during the early stages of the COVID-19 global pandemic with the cumulative value of outstanding credit and charge card balances declinin
77、g by well over$9 billion from March 2020 but stalling from the end of calendar 2020.17 Figure 2:Average value of credit and charge card total outstanding balances,Australia(A$millions)$0$5,000$10,000$15,000$20,000$25,000$30,000$35,000$40,000$45,000$50,000$55,00019851986198719881989199019911992199319
78、941995199619971998199920002001200220032004200520062007200820092010201120122013201420152016201720182019202020212022The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 15Page 14The BNPL sector is growing rapidly,but is still in its infancy0.48
79、%The volume of transactions processed under the Australian payments system in FY21 that were made using BNPL was 0.48%.(0.08%by value).180.74%The volume of consumer purchases and payments captured in 2021 that were made using BNPL was 0.74%(1.22%byvalue).193.71%The volume of consumer online payments
80、 in Australia in 2021 that were made using BNPL was 3.71%(2.12%by value).2018 Based on Reserve Bank of Australia Payments Data,November 2021 and data reported by the eight BNPL providers that are Code signatories.19 RFI Global,Australian Payments Diary,Base:All transactions(2021:n=12,973)20 Ibid.21
81、Research and Markets,“Australia Buy Now Pay Later Market Report 2021:BNPL Payment Adoption to Grow by 24 percent to 2028”,September 23,2021.22 Fisher,Chay;Holland,Cara;and West,Tim,“Developments in the Buy Now,Pay Later Market”,RBA Bulletin,March,2021,p.60.23 RFI Global Australian BNPL Council Decem
82、ber 2021.Base:All consumers(Mar-17:n=2,014.Nov-17:n=2,049,Mar-18:n=2,005,Jul-18:n=2,003,Nov-18:n=2,008,Mar-19:n=2,055,Jul-19:n=2,014,Nov-19:n=2,015,Mar-20:n=2,006,Jul-20:n=2,016,Nov-20:n=2,105,Mar-21:n=2,034,Jun-21:n=2,045,Sep-21:n=2,045,Nov-21:1,002).24 Based on Reserve Bank of Australia Payments D
83、ata,November 2021 and data reported by the eight BNPL providers that are Code signatories.The BNPL sector in Australia has shown steady growth and the COVID-19 global pandemic and accompanying rise in e-commerce over the last few years,combined with BNPLs strong online focus,have acted to accelerate
84、 BNPL usage.BNPL payment adoption is projected to record a 24 percent compound annual growth rate(CAGR)during 2021-2028,with gross merchandise value increasing from$10.2 billion in 2020,to$72.5 billion by 2028.21The annual reports of ASX-listed BNPL companies indicate the volume of transactions grew
85、 by around 55 percent during 2019-20 and tripled over the previous two financial years.22 However,BNPL accounts for a very small proportion of overall consumer spend.According to RFI Globals Annual Australian Payments Diary,just 0.74 percent by volume(1.22 percent by value)of purchases and payments
86、captured within the Diary were paid for using BNPL,rising to 3.71 percent by volume for consumer online payments,and 2.12 percent by value.23 Further illustrating this point,analysis of RBA data in conjunction with data supplied for this study by the BNPL providers(Provider Data)for FY21,indicates B
87、NPL transactions accounted for less than half of one percent(0.48 percent)of all transactions processed under the Australian payments system.In terms of value,BNPL accounted for only 0.08 percent of transaction values,as illustrated in the table below.Figure 3:BNPL as proportion of all transactions
88、and value processed during FY 202124Payment typeVolume of Transactions(billions)Share of Total Transaction Volume(percent)Value of Transactions(A$billions)Share of Total Transaction value(percent)Credit card3.0919.15%315.102.06%Debit card8.8955.13%428.072.80%Cheques0.040.23%376.572.47%Credit transfe
89、r2.3114.35%9,617.8762.99%Debit transfer0.965.94%3,756.8224.61%New Payments Platform0.764.72%761.784.99%BNPL*0.080.48%11.900.08%*Based on data reported by the eight BNPL providers that are Code signatories who are estimated to account for nearly 95 percent of the Australian BNPL market.OlgaKok/The Ec
90、onomic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 17Page 16Figure 4:Number and value of annual transactions for different payments methods2525 Based on Reserve Bank of Australia Payments Data,November 2021 and data reported by the eight BNPL pro
91、viders that are Code signatories Note:As the BNPL estimates from the RBA were provided for FY21,and in order to make a proper comparison,data points from the RBAs payments system data have been aggregated by financial year.While BNPL has increasingly become the payment method of choice for some cons
92、umers(and many online purchases),overall BNPL platforms are still in their infancy and represent a very small proportion of the number and value of transactions within the overall Australian payments system.This is evident when compared to other payments methods,as shown in the figure above.10.07.55
93、.02.5020012005200920132017202110,0007,5005,0002,5000200120052009201320172021Number of transactions(billions)Value of transactions(A$billions)BNPLCredit cardDebit cardNPPChequesCredit transferDebit transferBNPLBNPLCredit cardCredit cardDebit cardNPPNPPChequesChequesCredit transferCredit transferDebit
94、 transferDebit transferDebit cardMerchant testimonial Quality dental care can at times stretch the budget,and if ignored dental problems can be exponentially more expensive to treat over time.Openpay allows our patients to attend to their dental health when its actually needed with the convenience o
95、f no interest repayments.This is a crucial benefit in minimising the long term financial and health burden on our patients.Smile Solutions,MelbourneThe growth and diversity of BNPL products and services enhances consumer choice26 Australian Finance Industry Association Buy Now Pay Later Code of Prac
96、tice,Sections 11.3 11.8.27 RFI Global Australian BNPL Council December 2021.Base:All consumers(Mar-17:n=2,014.Nov-17:n=2,049,Mar-18:n=2,005,Jul-18:n=2,003,Nov-18:n=2,008,Mar-19:n=2,055,Jul-19:n=2,014,Nov-19:n=2,015,Mar-20:n=2,006,Jul-20:n=2,016,Nov-20:n=2,105,Mar-21:n=2,034,Jun-21:n=2,045,Sep-21:n=2
97、,045,Nov-21:1,002)28 McKinsey,D Deninzon,N Malik,A Kapoor,Banking Operations for a Customer Centric World,June 201929 Australian Finance Industry Association Buy Now Pay Later Code of Practice,Sections 11.3 11.8.The BNPL sector includes a broad range of business models so customers wanting a BNPL op
98、tion can choose the right one for them depending on their payment preferences,purchase type and personal circumstances.While most BNPL providers focus on lower value purchases,others offer BNPL for higher value items such as solar,home improvements,furniture and appliances,with a maximum purchase be
99、tween$10,000 and$30,000.Providers conduct suitability assessments proportionate to the value of the purchase before a consumer can make a purchase.26 The proportionality and range of both upfront and ongoing suitability assessments used by BNPL providers is an important consumer benefit,especially i
100、n the context of regular usage,with our data showing over 44 percent of BNPL users use BNPL at least on a monthly basis.27 Provider business models also differ,for example,some providers do not charge any fees other than those that can be avoided by on time payments,while some providers offer longer
101、 terms and charge a regular subscription or service fee.Some models enable consumers to make purchases using a virtual card with merchants that accept Visa or Mastercard cardpayments.The range of BNPL offerings means consumers have the flexibility to select the business model that best suits their p
102、urchasing needs and preferences.Technology enables delivery of an experience that meets consumer requirementsTechnology has had a revolutionary impact on the finance industry.Finance providers,including BNPL providers,that leverage technology such as artificial intelligence(AI),machine-learning mode
103、ls and advanced analytics,can determine the best way to engage with their customers in(near)real time and deliver the types of experience their customers expect now and into the future.Consumers increasingly expect distinctive,personalised offers with tailored communications delivered at the right t
104、ime through their preferred channel,and if they choose to engage,the customer experience should be fast and frictionless,requiring minimal effort.28Technology can be used across the customer journey,from acquisition,credit decisioning,fraud prevention and deepening relationships,to smart servicing a
105、nd dispute resolution,and technology-enabled decision-making is increasingly being embedded in the business models of traditional and non-traditional financial firms,including BNPL providers.Technology-enabled suitability assessments and credit decisioning are core elements of technology enabled fin
106、ance,facilitating quick assessments of a customers disposable income and other data to generate highly accurate predictions of a customers suitability and capacity to make regular loan payments.Providers use proprietary algorithms to assess a variety of structured and unstructured data collected fro
107、m both traditional sources(such as bank transaction history and tax returns)and new sources(which may include location data,phone and social media usage data,browsing history,utility bills,and other payment schedules).Some providers,including some BNPL providers,also use credit bureau reports,which
108、in Australia are updated on a monthly basis by participating lenders.29 All data is gathered digitally via a network of API connections at various points depending on the providers business model:at onboarding,during customer engagement and/or at the point of purchase.For existing customers,the addi
109、tional data source of a customers prior repayment history is used.The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 19Page 18Use of non-traditional data sources depends on a number of factors,including participation in the open banking reg
110、ime and other data sharing mechanisms,and requires the recipient to gain relevant consents,secure the data and protect customer privacy in accordance with regulatory requirements.Traditional approaches,which rely on a narrow set of criteria and credit bureau reports,rely upon consumers and small bus
111、inesses having a formal credit history and that the data collected is fulsome and up-to-date.To address gaps in credit reporting,additional new sources of data are increasingly used to supplement or replace credit bureau reports across the finance sector.Data is processed and analysed against the pr
112、oviders credit and compliance policies and servicing models using their proprietary algorithms.This can include comparing an individuals data to what is known about other individuals with similar profiles,and overlay of seasonality patterns and economic conditions.The larger the number of data sets
113、a provider has in their data warehouse,the more accurately their algorithms can predict credit performance.Some level of credit risk would be expected and would be determined by therisk appetiteof individualfinance providers.A technology-enabled financing decision is then made,based on the output of
114、 the data synthesis process and includes the relevant amount,repayment term and risk grade.For example,the Commonwealth Bank of Australia has announced a ten minute digital mortgage product,30 and online small business lender Prospa can make digital lending decisions in seconds with a consistently p
115、redictable static loss rate of between 4-6 percent.31By automating as much of the customer journey as possible,providers can reduce the costs of support functions and strengthen each customers experience with faster decisions and disbursement of funds and fewer requests for documentation.This allows
116、 for delivery of finance offers precisely tailored to meet that customers requirements.Cost savings can be reflected in pricing models and business efficiencies can be reflected in value-add services,including better money management capabilities.The use of technology also enables early detection of
117、 behaviours that signal higher risk of missed repayments,financial hardship,default and fraud.30 CBA Newsroom“Commonwealth Bank takes next step in reimagining banking for customers”,18 May 2022 https:/.au/articles/newsroom/2022/05/cba-reimagining-banking.html 31 Prospa Group Limited,Prospectus,May 2
118、019,p.54.AI and advanced analytics can also be used to improve dispute resolution.For example,customers with a complaint could make contact any time through internet,mobile,or email channels and in many cases receive quick,real-time resolution.On the back end,systems would perform almost instant dat
119、a evaluation about the dispute,surveying the customers history and leveraging historical dispute patterns to resolve the issue.A data-driven triage approach not only improves the customer experience,but enables teams to focus resources on more complex or difficult complaints.Merchant testimonial Ope
120、npay have provided a cost effective option for our association to get more people playing basketball.A lot of families couldnt afford to pay for their memberships upfront.Being able to offer a payment plan through Openpay has significantly increased the number of new members we have been able to att
121、ract to the club.Integration was easy,we promote the Openpays service through their content packages,which have been distributed via our social media channels and emails.Openpay have relieved our club of a massive administrative burden,as we no longer have to chase up members who have missed a payme
122、nt.We only have a part time finance administrator,so taking that responsibility off them was a big help for us.Mandurah Basketball Association caters for approximately 3000 players,playing six days per week,from beginning juniors to elite State Basketball League teams.The Association continues to gr
123、ow with player development programs,school holiday camps and competitions for all levels of skill.Since the Association started offering payment plans with Openpay they have been able to significantly increase new memberships and reduce their administrative burden.Mandurah Basketball Association,Vic
124、toriaYarek Gora/The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 21Page 20Competition is continuing to intensify and is delivering lower merchant costs32 ANZ BNPL Competitor Analysis;Zip Annual Report(2016);Openpay Prospectus(2019);ASIC,h
125、ttps:/.au/;AlphaBeta Afterpay submission to RBA(2019)33 Data provided to AFIA for the Code Compliance Committee by the eight Code signatories,for the period ending 30 June 2021.34 Survey work conducted by RFI Global Australian BNPL Council,December 2021.Base:All consumers(Mar-17:n=2,014.Nov-17:n=2,0
126、49,Mar-18:n=2,005,Jul-18:n=2,003,Nov-18:n=2,008,Mar-19:n=2,055,Jul-19:n=2,014,Nov-19:n=2,015,Mar-20:n=2,006,Jul-20:n=2,016,Nov-20:n=2,105,Mar-21:n=2,034,Jun-21:n=2,045,Sep-21:n=2,045,Nov-21:1,002,Mar-22:n=1008)The BNPL sector is dynamic and continuously evolving,as evidenced by its compound annual g
127、rowth rate of 29 percent from 2012 to 2021.32 Current BNPL business models are being challenged,and the percentage fee BNPL providers get from merchants on the purchase value is subject to competitive pressures.As an example,the Commonwealth Bank of Australias partnership with Klarna offered a fee-f
128、ree introductory six months for new merchants in Australia.Between 2019 and 2021,the number of merchants accepting BNPL more than doubled and is estimated to be at least 135,400,not taking into account any duplication.33 Over this period,increased competition has been associated with decreased fees,
129、especially for medium-sized and enterprise merchants.Banks and other financial institutions have also launched products with BNPL-like features,including Commbank with“Step Pay”,PayPal with“Pay in 4”and Citigroup with“Spot”.Other finance companies have also launched products with BNPL features,inclu
130、ding Affirm for Peloton products only,FuPay,Payitlater and WizPay.In early June 2022 Apple announced“Apple Pay Later”,a new feature enabling users to split Apple Pay purchases into four payments over six weeks.None of these providers are signatories to AFIAs Buy Now Pay Later Code of Practice.Banks
131、offering BNPL products are signatories of the Australian Banking Associations Banking Code of Practice.BNPL is reaching universal awareness with consumers,with 94 percent of consumers aware of at least one BNPL service in March 2022,up from 32 percent in March 2017.3432%50%61%66%68%78%79%84%86%84%92
132、%92%93%95%91%94%0%10%20%30%40%50%60%70%80%90%100%Mar-17Nov-17Mar-18Jul-18Nov-18Mar-19Jul-19Nov-19Mar-20Jul-20Nov-20Mar-21Jun-21Sep-21Nov-21Mar-22Figure 5:Consumers aware of at least one BNPL service over timeFigure 6:BNPL providers currently operating in Australia that are Code signatories35BNPL Pro
133、viderYear BNPL launchedEstablishment feesAccount keeping feesLate payment feesLate payment fees capFocus Afterpay2014NoNoYesYesPurchases up to$2,000Brighte2015NoYesYesYesSolar and home improvements.Purchases up to$30,000Humm BNPL2019YesYesYesYesPurchases up to$30,000Klarna2005NoNoYesYesPurchases up
134、to$2,000LatitudePayLatitudePay+20192021NoNoNoYesYesYesYesYesPurchases up to$1,000Purchases up to$10,000Openpay2013YesYesYesYesPurchases up to$20,000Payright2016YesYesYesYesLarger and more considered purchases up to$20,000Zip2013NoYesYesYesPurchases up to$2,000The BNPL sector is regulated and has int
135、roduced additional consumer safeguards through self-regulation 35 Signatories as at 1 June 202236 ASIC,Buy now pay later:An industry update,Report 672,November 2020,p.4.37 Lexology,“Buy Now Pay Later-A changing regulatory landscape”25 November,2021,https:/ ASIC,“Design and distribution obligations:S
136、ignificant dealing notification requirement”accessed 11 January,2022.https:/asic.gov.au/regulatory-resources/financial-services/design-and-distribution-obligations-significant-dealing-notification-requirements/39 ASIC(2020)op.cit.40 AFIA,“AFIA Buy Now Pay Later(BNPL)Code of Practice”accessed 21 Dece
137、mber,2021.https:/afia.asn.au/AFIA-Buy-Now-Pay-Later-Code-of-Practice In recent years,there has been increased public and regulatory scrutiny of the Australian payments system in the context of the rise of alternative payment methods,including BNPL,digital wallets and crypto currencies.These new inno
138、vative payment methods differ in the degree of consumer protection and regulatory oversight currently afforded.In Australia,BNPL providers are regulated under the Australian Securities and Investments Commission Act 2001(“the ASIC Act”).36 BNPL providers are subject to various legal and regulatory o
139、bligations,including unconscionable conduct,misleading and deceptive conduct,and unfair contract terms laws.BNPL providers must also meet legal and regulatory obligations with oversight from the ACCC,AUSTRAC,OAIC and the courts.37 Furthermore,BNPL providers are also subject to ASICs new product inte
140、rvention power and the recently introduced design and distribution obligations.38 In ASICs words:“these new regulatory tools,which focus on consumer outcomes and harms rather than imposing prescriptive compliance obligations,will play an important role in promoting good consumer outcomes”across bank
141、ing and financial services inAustralia.39BNPL is also self-regulated through AFIAs Buy Now Pay Later Code of Practice(“the Code”),which came into effect on 1 March,2021.40 The Code is a world first for the sector,setting best practice standards and strengthening consumer protections.AFIA undertook b
142、road consultation with its BNPL members and key stakeholders such as consumer advocates to understand the key issues the Code should address to deliver confidence to consumers,advocates,ASIC and other stakeholders.The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pa
143、y Later in AustraliaPage 23Page 22The BNPL Code of Practice goes above and beyond the lawThe Code goes above and beyond the law by ensuring customers have strong safeguards in place that help them better understand the product and their rights.All Code Compliant BNPL providers conduct suitability as
144、sessments before a potential customer can make a purchase and additional checks in life to prevent,for example,customers extending themselves further if they are showing signs of difficulty making repayments.In addition,there are detailed commitments to help people who find themselves in financial h
145、ardship.Furthermore,it is mandatory for all Code-compliant BNPL providers to ensure customers have access to internal complaints handling,so complaints are resolved quickly and fairly,and if they cannot be resolved providers must be members of the Australian Financial Complaints Authority(AFCA)to pr
146、ovide external dispute resolution services.A Code Compliance Committee,independent of AFIA and the BNPL providers,comprising industry and consumer representatives is charged with monitoring provider activity and dealing with complaints and potential non-compliance.The Code Compliance Committee is ch
147、aired by former long-term ACCC deputy chairman Dr Michael Schaper and includes a consumer representative nominated by the Consumers Association of Australia,Ms Jillian Brewer,and experienced corporate director and lawyer Mr Craig Pudig.Merchant testimonial BNPL suits our business model perfectly and
148、 gives clients affordable and easy payment options to pay for the prints and products they truly love,either in full or by instalments.“Our clients are very educated on their purchase options.We promote Payright via our website,through our social media posts(Facebook posts and Instagram stories),it
149、is mentioned on several of our client email templates and is also specified on a flyer we hand to clients after their photo session.BNPL has enabled my business to grow.The option of regular,lower repayments has suited dozens of my clients,and as a result they were able to purchase all of the items
150、they really wanted.Its allowed me to grow overall revenue and also enabled me to upsell and grow my average sale total.Customers are choosing to use Payright for a number of reasons.Some use it to order more items but at an affordable rate,some use it to buy items they otherwise wouldnt be able to a
151、t the time,whereas others sign up to buy themselves some time over the busy Christmas period.Payright drives approximately 10 percent of my total sales including many I would otherwise have missed.Thats 10 percent incremental sales Im able to gain by offering a more affordable payment solution to my
152、 customers.Clients love having the choice to pay their orders off over select time periods and at intervals of their choice,and with a lower deposit.Plus,they can collect their orders as soon as they are printed which is a real draw card.Payright has been a game changer for Houndstooth Studio on a n
153、umber of levels.There are so many benefits.Previously we ran our own layby plans where clients paid a fixed amount via direct debit each fortnight and we held their goods until they were paid for in full.While most clients paid on time,we found ourselves having to regularly chase up late or missed p
154、ayments.Now I dont have to store masses of product anymore while waiting for them to be paid off,and my cash flow on these transactions is pretty much immediate which is so much better than having to sometimes wait years for an order to be paid in full.Alex Cearns,Houndstooth Studio,PerthLiliya Kuli
155、anionak/The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 25Page 24BNPL is becoming a leading payments choice for some consumers8%Of Australians say they prefer to use BNPL for their online transactions4160%Of BNPL transactions were conduc
156、ted online in FY2142$151The average BNPL transaction value in 202143BNPL is becoming the leading payments choice for some consumers.41 RFI Global Australian BNPL Council,December 2021.Base:All consumers(Mar-17:n=2,014.Nov-17:n=2,049,Mar-18:n=2,005,Jul-18:n=2,003,Nov-18:n=2,008,Mar-19:n=2,055,Jul-19:
157、n=2,014,Nov-19:n=2,015,Mar-20:n=2,006,Jul-20:n=2,016,Nov-20:n=2,105,Mar-21:n=2,034,Jun-21:n=2,045,Sep-21:n=2,045,Nov-21:1,002).Tests for significance carried out.42 Ibid.43 Based on 78 million transactions and$11.9 billion in transaction value in FY21.Based on survey data collected in January-Februa
158、ry 2021 by BIS Oxford Economics,provided by BNPL providers that are Code signatories.44 RFI Global Australian BNPL Council,March 2022.45 Ibid.Usage increased for all age groups during the period March 2021 to March 2022,with approximately 50 percent of BNPL users aged 18-24 first using a BNPL servic
159、e in 2021,recognising a shift in consumer preferences for online transactions,zero interest products and better management of cashflow.44 The proportion of adult Australians who have used BNPL increased over the last 12 months,from 32 percent in March 2021 to 38 percent in March 2022.Figure 7:BNPL U
160、sage over time by age group45Women are more likely to have used BNPL than men(46 percent vs.30 percent)and have seen a larger increase in BNPL usage in the last 12 months,while 48 percent of BNPL users surveyed say they have tried more than one BNPL service,reflecting a shift in consumer preferences
161、 to choosing the right product that suits their specific circumstances and type of purchase.46Figure 8:BNPL Usage over time by gender47The average BNPL transaction value across all transactions in FY21 was$151,48 and this includes where BNPL is used to fund higher value purchases,such as solar syste
162、m installations or home improvement related purchases and more considered purchases,such as photography and education.46 Ibid.47 RFI Global Australian BNPL Council,December 2021.48 Based on 78 million transactions that year and a spend of$11.9 billion in FY21 by the eight BNPL providers that are Cod
163、e signatories.Based on survey data collected in January-February 2021 by BIS Oxford Economics.49 RFI Global Australian BNPL Council,December 2021.50 Ibid.51 Ibid.52 Ibid.To date,BNPL has typically been used for e-commerce transactions and not in a physical store,and this trend accelerated in 2021 du
164、e to the COVID-19 global pandemic.For example,the percentage of all online/in-app clothing purchases made with BNPL in 2019 was 14 percent,increasing to 20 percent by November 2020 and 22 percent in 2021.49 In May 2020,BNPL was preferred by 5 percent of consumers for online shopping,rising to 8 perc
165、ent in 2021.50 Eight percent of consumers now say BNPL is their preferred way of paying for online shopping purchases.Five percent say BNPL is their preferred way of paying for booking flights online or buying tickets online to a concert,music festival or show.No consumers surveyed say BNPL is their
166、 preferred way of paying for recurring subscriptions such as Netflix,Stan and Spotify.51On average in 2021 BNPL users conducted over 60 percent of their purchases online via a website or an app.52BNPL User Testimonial I use BNPL for electronics exclusively and only once every 6 months on average.I f
167、und my BNPL account with direct debit out of my bank account,its no fuss easy to apply for and easy to use across a wide variety of shops.I do not miss payments,as I am not in the business of paying interest if I can avoid it.I have Afterpay and Zip as they both cover everything I would need to buy(
168、in terms of shops).When asked about AFIAs BNPL Code of Practice I know there is a Code of Practice for BNPL.It is required so I dont have any strong feelings either way.BNPL user,Male,25.44%52%40%33%23%14%32%55%58%48%39%26%16%38%0%20%10%40%30%50%60%70%18-2425-3435-4445-5455-6465+TotalMarch 2021Age g
169、roupMarch 202226%30%38%46%0%20%10%40%30%50%15%5%35%25%45%MenWomenMarch 2021March 2022The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 27Page 2659 Ibid.60 Ibid.61 Ibid.62 Ibid.Transactors being credit card holders who always pay their bala
170、nce in full and never pay interest are significantly more likely to have funded their most recent BNPL purchase with a credit card(46 percent)59.This is compared to BNPL users who are Revolvers being credit card holders who carry their balance forwards and therefore incur interest,(approximately 30
171、percent)suggesting the way a consumer uses a credit cardimpacts their decision of how to fund BNPL purchases.60Of the 22 percent of BNPL users who used a credit card to fund their repayments on their last BNPL purchase,66 percent always pay their overall credit card balance in full every month and n
172、ever pay interest.Nine percent of BNPL users who used a credit card to fund their most recent BNPL purchase always carry a credit card balance forward each month.61Figure 9:The credit card repayment behaviour of BNPL users with their BNPL account attached to a credit card62Consumers accrue benefits
173、in many areas by choosing BNPL1.Avoiding interest costs:BNPL providers offerinterest-free instalment payments,with the onlyextra costs being those that can be avoided bymaking payments on schedule.BNPL users aregenerally choosing not to own credit cards becausethey want to avoid interest,fees and de
174、bt.2.More control over money:BNPLs paymentstructure gives users more control over theirrepayment timing and support for budgeting andcashflow management.This enables consumers tomake purchases confidently in a way that fits withintheir own budgeting needs,for example,to alignwith salary pay periods
175、or other bills and expenses.3.Speed and convenience:Consumers nowexpect fast,personalised offers with tailoredcommunications delivered at the right time,throughtheir preferred channel,with automated onboardingprocesses and seamless checkout options.BNPLproviders focus on providing the high quality e
176、nd-to-end digital customer journeys expected byconsumers.4.Flexibility and choice:Consumers now expectchoice in the way they can pay for goods andservices.BNPL is an alternative to other paymentproducts such as credit cards,personal loans,payday loans and wage advance products.TheBNPL sector include
177、s a broad range of businessmodels giving consumers flexibility and choicebased on their circumstances and purchase type.5.Exposure to new merchants:BNPL providersgenerally offer an online shop directory allowingconsumers to search and discover new and relevantmerchants who may offer products and ser
178、vicesbetter suited to their needs or budget.6.Checks and Balances:Consumers are typicallystarted on low spending limits with the firstinstalment payment required upfront;and areprevented from spending additional funds if anyrepayment is missed,lowering their risk of exposureto expensive long-term or
179、 revolving debt.Consumers saved$102 million in interest in FY21 by using BNPL instead of credit cards$102 millionConsumers avoided$102 million in interest in FY21 by using BNPL instead of a credit card53 48%Of BNPL users do not hold a credit card54 22%Of BNPL users use a credit card to make their re
180、payments5553 Based on BIS Oxford Economics analysis using survey data collected from BNPL providers by BIS Oxford Economics and AFIA in January-February 2022.and RFI Global survey data(December 2021 February 2022)54 RFI Global Australian BNPL Council,December 2021.55 Ibid.56 Ibid.57 Ibid.58 Ibid.BNP
181、L enables consumers to pay for purchases of goods or services in regular instalments over a shorter period of time,usually interest free.Users are typically provided with a payment schedule in their BNPL app and are sent regular payment reminders.BNPL users are often choosing not to own credit cards
182、 because they want to avoid interest,fees and debt.48 percent of BNPL users surveyed dont have a credit card at all and use either a debit card or bank account to fund their BNPL repayments.56 Just 1 in 5 BNPL users made their most recent BNPL purchase with a credit card,with the majority of BNPL us
183、ers reporting using a debit card or bank account.57 The proportion of BNPL users funding their most recent purchase with a credit card increases with age.85 percent of those aged 18-24 who are using BNPL fund their repayments with a bank account or debit card.58 BNPL User Testimonial I have two acco
184、unts.I did have a third account,but it is usually at the same places,so I got rid of it.I have Klarna because it is used at more expensive brands,and I like how it gives you the card to use on almost any store even if its not accepted and then Afterpay because its always an easy option when you go t
185、o check out.I mainly use my BNPL for clothes,accessories,and I have bought flights(when we could travel)and other goods I might need.I have even paid for my hair to be cut on BNPL.I probably use BNPL an average of twice a month.Ive used BNPL since it first started,so I think I was 22 when I first us
186、ed it,and so now its just habitual.I first started using it because I generally did not have the money to buy the clothes I wanted.Now I use it because I think some months for me are a lot busier socially,and then it gives me the ability to spread out my money and not to feel overwhelmed.I have my B
187、NPL accounts attached to my credit card and my debit card.I pay my credit off each month with no interest I only have a minimal limit on the credit card.I havent missed a payment.I always pay in advance when I get paid from work.When asked about AFIAs BNPL Code of Practice I know theres a Code for B
188、NPL if things go wrong but I feel indifferent.As a consumer,I honestly think that BNPL has been the only product that hasnt felt like it has had hidden fees,so for it to become regulated could result in changes.To be honest,BNPL has been the best thing that ever happened,and it has allowed me to go
189、away on holidays,buy clothes that I wanted,and not make me feel as anxious.When I was younger,it helped me so much,and it sort of changed the way I thought of payments and felt just like paying a phone bill I really love it.BNPL user,female,28Which of the following statements best describes how you
190、normally handle your monthly card balance on your credit card(s)?I pay my balance in full every month i.e.I never pay interestI sometimes carry a balance over 2 or more months and sometimes pay in full,i.e.I sometimes pay interestI usually carry a balance forward each month,i.e.I usually pay interes
191、tI always carry a balance forward each month,i.e.I always pay interestBase:BNPL users(Dec-21:Total:n=1,006)Base 2:BNPL users who used a credit card to fund their most recent purchase(Dec-21:Total:n=203)22%of BNPL users used a credit card to fund their most recent BNPL purchase66%18%5%9%The Economic
192、Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 29Page 28Consumers prefer using BNPL because it gives them more control over their money54%Of users say BNPL helps them helps them manage their cashflow6349%Of users say BNPL helps them feel in control
193、of their spending6454%Use BNPL to avoid interestcharges6563 Ibid.64 Ibid.65 Ibid.66 Ibid.67 Ibid.68 Ibid69 Ibid.Consumers use BNPL as a payment method for a variety of reasons,in particular because it helps them manage their cashflow(54 percent)and feel in control of their spending(49 percent).This
194、enables consumers to make purchases in a way that fits within their own budgeting needs,for example,to align with salary pay periods or other bills and expenses.66BNPL users believe BNPL offers benefits compared to a credit card,with the primary benefits being firstly cost:specifically avoiding inte
195、rest(54 percent)and lower fees(38 percent);and secondly control:making it easier to repay large purchases(43 percent)and to track and manage repayments(39 percent).Even among non-BNPL users there is recognition BNPL may offer some benefits over other payment options such as a credit card,with 42 per
196、cent agreeing there are benefits to using BNPL-and the primary benefit for 1 in 4 non-users being the fact that BNPL does not charge interest.67BNPL includes a broad range of business models giving consumers flexibility and choice based on their circumstances and purchase type.The frequency of BNPL
197、usage by consumers varies by provider and BNPL services catering to higher value purchases are used much less frequently and have a higher average transaction value.Users report using BNPL an average of 16.6 times per year or 1.38 times per month.When BNPL users were asked about the value of their m
198、ost recent transaction,more than 97 percent of the transactions they reported were less than$3,000,2.5 percent were between$3,000 and$10,000 and only 0.1 percent were over$10,000.68BNPL is most frequently used in five main categories as detailed in the table below.69 Figure 10:Types of purchases con
199、sumers have made using BNPL,by age182425343544455455646580Total1Clothing and shoes(47%)Clothing and shoes(50%)Clothing and shoes(39%)Clothing and shoes (42%)Clothing and shoes (39%)Household Appliances(34%)Clothing and shoes(42%)2Electronics(24%)Electronics(34%)Electronics(31%)Household Appliances (
200、26%)Household Appliances(35%)Clothing and shoes (33%)Electronics(29%)3Games&toys(24%)Household Appliances(28%)Household Appliances(26%)Furniture and homewares(26%)Furniture and homewares(27%)Electronics (29%)Household Appliances(28%)4Jewellery and accessories(22%)Furniture and homewares (26%)Furnitu
201、re and homewares(21%)Electronics (25%)Electronics(25%)Furniture and homewares (21%)Furniture and homewares (24%)5Beauty&cosmetics(20%)Games&toys (26%)Games&toys(21%)Games&toys (22%)Jewellery and accessories(16%)Jewellery and accessories (11%)Games&toys (19%)jafara/The Economic Impact of Buy Now Pay
202、Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 31Page 30Figure 11:Percentage of BNPL users who have experienced positive and negative outcomes as a result of making repayments76ItemImpact of using BNPL(%)*Impact of using credit cards(%)*I was able to budget more effectiv
203、ely25.315.3I was able to pay household bills 10.59.9I was able to save more13.49.8I was able to purchase essentials I could not purchase otherwise17.1Not askedWent without essentials to make repayments 4.45.1Cut back on essentials to make repayments7.39.776 RFI Global Australian BNPL Council,Decembe
204、r 2021.*BNPL users n=1,006*Current or recent credit cardholders n=766.Figures may not sum to total due to rounding.77 Data provided to AFIA in September 2021 for the Code Compliance Committee by the eight Code signatories,for the period ending 30 June 2021.78 Ibid.79 AFCA,Response to the Parliamenta
205、ry Joint Committee on Corporations and Financial Services,9 July 2021 Answer to question 010,011,012 from Mr Hill MP:Buy now and pay later complaints received by AFCA-taken on notice from the public hearing on 18 June 2021.80 Ibid.81 RBA,released 7 July 2021,original data,excludes commercial cards.8
206、2 AFCA Response to the Parliamentary Joint Committee on Corporations and Financial Services,9 July 2021.Answer to question 07,08 from Senator ONeill:Complaints received by AFCA-taken on notice from the public hearing on 18 June 2021.To gain greater insight into how BNPL users are managing their fina
207、nces,we looked at financial hardship and complaints data and conducted research into BNPL user attitudes towards essentials.The level of financial hardship relative to the BNPL user base is low.Data collected from the eight BNPL Code signatories,77 together estimated to account for nearly 95 percent
208、 of the BNPL market by volume,indicates a total of 20,055 hardship arrangements were in place on 30 June 2021.At the same point in time,there were just over 5.9 million active BNPL accounts,indicating that 0.34 percent of active BNPL accounts were the subject of hardship arrangements.78 The level of
209、 complaints relative to the BNPL user base is very low.Data provided by the Australian Financial Complaints Authority(AFCA)indicates that in the period 1 July 2020 to 30 June 2021,AFCA received 767 BNPL complaints.79 Given there were just over 5.9 million BNPL accounts held with BNPL providers durin
210、g the same period,this indicates 0.01 percent of these BNPL accounts were the subject of EDR complaints to AFCA.AFCA reported,“Among the larger BNPL providers,common types of complaints we see involve:Complaints about actions taken by BNPL providersto limit access by consumers,including closing orre
211、fusing to open accounts and imposing controls onaccount usage;and Complaints about credit enquiries,possibly reflectingconsumers lack of understanding that a BNPLapplication may result in a credit check(noting thatwe also see high levels of complaints about creditenquiries for regulated credit produ
212、cts).”80Figure 12:The ratio of BNPL complaints and Credit Card complaints per Account,FY21Number of AccountsNumber of complaints recorded by AFCARatio of Complaints to AccountsBNPL5.9 million7670.01%Personal credit cards12.6 million819,902820.08%The average values for purchases on household applianc
213、es($505),electronics($460)and furniture($400)are significantly higher than the average amount spent on beauty products($100)and clothing($112).70 On average,based on RFI Global consumer survey data,BNPL users estimate they have spent$1,102 through BNPL services in the last 12 months,however,for thos
214、e aged 18-24 the amount is less than half this amount at$534.7150 percent of users say BNPL allows them to time their purchases to coincide with special offers and reduce their purchase costs.Furthermore,35 percent say they have been introduced to new brands and retailers via BNPL services and are t
215、herefore able to find more suitable products to meet their needs.72 BNPL users are significantly more likely than non-BNPL users to utilise new or emerging payment methods,including mobile wallets and are significantly less likely to use cash or credit cards.This suggests this segment is interested
216、in trialling new ways to pay for their goods and services and are more open to using digital payment innovations that are convenient and interface easily with mobile devices,for example a smartphone.7370 Ibid.71 Ibid.72 Ibid.73 Ibid.74 ASIC(2020)op.cit.75 RFI Global Australian BNPL Council,December
217、2021.The cost of BNPL to consumers what happens when things dont go as plannedAs noted by ASIC,“consumers dont always manage their money correctly”,74 and this is relevant for all financial services and credit providers.BNPL providers offer interest-free instalment payments,with typically the only e
218、xtra costs being those that can be avoided by making payments on schedule.18 percent of BNPL users surveyed have missed a BNPL repayment in the past 12 months compared to 17 percent of credit card holders who missed a credit card repayment.75Purchase limits on BNPL accounts are typically lower than
219、for credit cards which acts to reduce the potential for consumers to spend beyond their repayment capacity and can facilitate them getting back on track faster.In all cases,for those who make their BNPL repayments late,late fees are capped and users cannot make additional purchases until their accou
220、nt is settled.This breaks the cycle of revolving debt enabled by traditional credit products such as credit cards.BNPL users of all ages were asked to indicate positive or negative outcomes as a result of making firstly BNPL,and secondly,credit card repayments.Users are more likely to say that BNPL
221、has helped them budget than credit cards and are also more likely to say that BNPL has helped them save than credit cards.Conversely,BNPL users are more likely to say that credit cards have caused them to go without,or cut back on,essentials than BNPL.BNPL User Testimonial Ive used BNPL since the be
222、ginning.I only have one BNPL account and use it once a month to every fortnight.I use BNPL because I dont have to pay the full amount in one go.If I just used my debit card its all paid in one go,but I may as well have my money in my account for as long as possible.Im also a platinum member of my BN
223、PL provider so I dont actually pay anything until a fortnight after my purchase.I prefer BNPL over a credit card since it has no fees and automatically splits the payments up with no interest charged if paid off according to their schedule.If I dont have a lot of money in my account I can still buy
224、what I want and pay it off over a short period of time.I use my debit card set up on an auto payment and bank account as a back up payment option and Ive never missed a payment.I love it!(BNPL).Credit cards seem old fashioned now.I hope it is here to stay.Easy to use,accessible and available to ever
225、yone.No fees or strings attached(from what I have seen at least).BNPL user,female,30.The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 33Page 32Consumers definition of essentials changes by age and over time8585 RFI Global Australian BNPL
226、Council,February 2022.n=1001.86 Refer to inset on page 32 of this Report for definitions of each segment.87 RFI Global Australian BNPL Council,February 2022.88 Ibid89 Ibid90 Ibid In order to better understand consumer attitudes to BNPL it is important to understand how individuals think about their
227、finances more broadly.Consumers at different life stages have very different opinions on which expenses are essential,with consumption patterns and priorities changing based on personal circumstances,preferences and over time.For many of the consumers surveyed,the following goods and services are de
228、emed essential:socialising with friends,mobile phone ownership,streaming services,saving money,gym membership,pet ownership,household bills,childcare,child-related expenditure and car ownership.On average,consumers in the Enjoying Retirement86 segment believe they have 8.2 essential expenses,compare
229、d to consumers in the Finding their Feet and Young Families segments,who believe they have 13.5 and 13.2 different essential expenses,respectively.87Socialising is more likely to be seen as essential among the Finding their Feet and Independent Starters segments.30 percent of Finding their Feet and
230、28 percent of Independent Starters consider going out with friends to be an essential expense.This compares with only 18 percent of Established Families and 14 percent of those Enjoying Retirement.88For those who are in the Finding their Feet segment,54 percent consider entertainment/streaming servi
231、ces to be essential and 35 percent consider gym memberships to be essential.This compares to the average for all other age groups of 31 percent and 13 percent,respectively.89Consumers in the Finding their Feet,Independent Starters and Young Families segments switch their spending preferences proacti
232、vely and are the most likely to indicate some expenses they saw as non-essential 12 months ago,they now view as essential,and vice versa.Figure 13:Essential Expenses by Life Stage900%10%20%30%40%50%60%70%80%90%100%Findingtheir feetYoungand freeIndependentstartersYoungfamiliesEstablishedfamiliesMatur
233、eworkersEnjoyingretirementLife stage segmentsHousing(mortgagerepayments/rent)Household billse.g.gas,water,electricityMedical expensesMobile phone:owning/usageCar:Owning/petrol/expensesCredit card repaymentsChildcare/Child educationBuy Now Pay Later repaymentsEntertainment/streamingservicesEating out
234、 and fooddelivery servicesThe proportion of BNPL users going without essentials is low.83 RFI Global Australian BNPL Council,December 2021.84 Ibid.Over the 12 months to December 2021,four percent of BNPL users went without essentials and seven percent cut back on essentials as a result of making BNP
235、L repayments.Among this group,this happened on average three times over this 12 month period.83BNPL users 24 years old and under are significantly more likely than other BNPL users to indicate they have cut back on essentials in order to make their BNPL repayments.84 They also have different opinion
236、s on which expenses are essential compared to other segments.Finding their Feet:18-21 living with parentsThose Finding their Feet are the most likely to identify saving on a regular basis as an essential expense category(an essential)(89 percent),and one of only two segments not including medical ex
237、penses in their top three essentials.Student loan repayments(70 percent)feature in the top ten for this segment only.Those Finding their Feet are the life stage most likely to consider entertainment/streaming services as essential(54 percent)and they also see mobile phone ownership/usage as essentia
238、l(84 percent).They might still be living with parents but many recognise household bills as essential(78 percent).Young&Free:22-35 living with parents and no children of their ownThose who are Young&Free are the most likely to identify medical expenses as an essential.In contrast to the 18-21 Living
239、 with Parents segment,saving on a regular basis only ranks fifth as an essential(83 percent)an interesting finding given both segments are still living at home.Household bills rank highly again(86 percent,fourth priority)as does home internet(94 percent,third priority).The Young&Free rank pet owners
240、hip more highly than any other segment,ranking it 7th and ahead of credit card or personal loan repayments.Independent starters:35 or under not living with parents and no childrenAs with other segments,bills,medical expenses and mobile phone costs are the top three essentials for Independent Starter
241、s.This is the only segment for which rent is a top five essential(80 percent).Mortgage repayments become more commonly considered essential at this life stage(60 percent).28 percent of Independent Starters consider going out with friends to be essential and they are life stage most likely to conside
242、r food delivery services as essential(24 percent).35 percent indicate that theyre now seeing some expenses as essential which they didnt 12 months ago.Young families:35 or under with childrenThe expenses Young Families consider essential are indicative of a clear shift in priorities from other life
243、stages.Car expenses(83 percent)and childcare and child education costs(81 percent)emerge as top five essentials.Other expenses featuring in the top five are those common across all life stages household bills,home internet and medical expenses.This segment is the most likely to indicate theyre now s
244、eeing some purchases as essential that they didnt 12 months ago(38 percent).Established families:36-54 with children living with themThe expenses Established Families consider essential are very similar to Young Families.Childcare expenses drop out of the top five(68 percent),with household bills,me
245、dical expenses and car expenses making up the top three.Mature workers:55+and workingFor Mature Workers,childcare and child education costs have become less essential(24 percent).Mature Workers are very likely to say their essentials have not changed in the past 12 months(66 percent).This segment is
246、 the only one with home internet as one of their top two essentials.Enjoying retirement:55+and retired/not workingThose Enjoying Retirement have the smallest number of essentials.The top three of household bills,medical expenses and car expenses are not unique,but other expenses such as saving on a
247、regular basis(63 percent),childcare costs(10 percent)and entertainment services(16 percent)become significantly less essential compared to other life stages.Those Enjoying Retirement are the most likely to indicate no changes to their essentials over the past 12 months(76 percent)and they dont expec
248、t any changes over the next 12 months(82 percent).The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 35Page 34Only 24 percent of consumers in the Finding their Feet segment,31 percent of Independent Starters and 34 percent of Young Families
249、 indicate that there has been no change in the type or purchases they see as essential.This is in stark comparison to 66 percent of Mature Workers and 76 percent of Enjoying Retirement who have a fixed view on what they regard as essential.9191 Ibid92 Ibid93 Based on survey data collected from BNPL
250、providers by BIS Oxford Economics and AFIA in January-February 2022.94 Based on Ibid,quantitative surveys of conducted by RFI Global across December,2021 and January and February 2022;and BIS Oxford Economics analysis.95 IbidLooking forward over the next 12 months,38 percent of Finding their Feet an
251、d 39 percent of Young Families segments believe they will start seeing some expenses as essential which they currently view as non-essential,including travel.92 The gross consumer benefit from using BNPL was worth A$264 million in FY21$11.9 billionThe value of transactions made using BNPL in FY21 in
252、 Australia93$264 millionThe estimated gross benefit of BNPL to consumers94$68 millionThe estimated net benefit accruing to BNPL customers in FY2195BIS Oxford Economics have calculated that BNPL users in Australia gained$264 million in gross benefit from using BNPL services in FY21 and$68 million in
253、net benefits.These benefits were driven by savings in interest and fee costs(relative to credit cards),surcharge savings and the benefits to consumers of delaying purchase payments,allowing for more effective budgeting,maximising return on savings and providing a better reflection of consumer prefer
254、ences.BNPL User Testimonial I have two BNPL accounts which I use depending on which one is accepted by the places I like to shop.I only use them for online shopping and I mostly buy clothes,jewellery and beauty products.Ive missed a few payments but only because I didnt remember to move money into t
255、he right account in time so that was on me.Ive probably gone without my essentials three times in the past 12 months so I could make my repayments.For me,the absolute number one essential in my life is my mobile phone.I could NEVER go without that.Its the thing my whole life revolves around.Second i
256、s going out with my friends and third is petrol for my car.Those are my essentials.I dont consider food or groceries as an essential because I live at home and my parents pay for that.When I need to use my money to make BNPL repayments I still go out with friends but just dont buy drinks or food,and
257、 I stop using my car if I cant afford petrol and just walk or use the train.BNPL user,Female,aged 23Cineberg/The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 37Page 36BNPL is supporting the growth of Australian businesses$2.13 billionThe
258、increase in gross revenue generated by BNPL for Australian businesses in FY2196$18,576The average increase in revenue generated by BNPL for small businesses in FY2197135,400+The estimated number of BNPL-accepting merchants in Australia98BNPL supports merchant participation in the digital economy96 B
259、ased on BIS Oxford Economics analysis using survey data collected from BNPL providers by BIS Oxford Economics and AFIA in January-February 2022.and RFI Global survey data(December 2021 February 2022).97 RFI Global,Merchant Survey,January 2022.Total n=70298 Data provided to AFIA for the Code Complian
260、ce Committee by the eight Code signatories,for the period ending 30 June 2021.99 ABS,Online sales,June 2021,Supplementary COVID-19 Analysis100 RFI Global,Merchant Survey,January 2022.Total n=323Australian consumers are demanding more flexibility in how they pay for goods and services.Online non-food
261、 sales have increased 314 percent since January 2015 with a spike in growth during the COVID-19 global pandemic,when restrictions placed on the operation of physical retail stores resulted in both businesses and consumers turning to online trading.99To adapt to this shift,most retailers are evolving
262、 to have an online presence,and many are using new point of sale offerings and payment technologies,like BNPL and PayPal,to meet the needs of their increasingly value conscious customers,replace cash usage,develop offers that meet these needs and improve the customer experience.80 percent of BNPL ac
263、cepting merchants surveyed are selling via a website,versus only 40 percent of non-BNPL accepting merchants.BNPL provides benefits to both merchants and consumers.However,unlike credit cards,where the benefits of additional services,including loyalty points,mainly accrue to the consumer,BNPL deliver
264、s the majority of its benefits to merchants.Consumer loyalty programs may also be offered by some BNPL providers.The benefits Australian merchants receive from accepting BNPL include driving incremental sales,increasing average order values and attracting new customers.BNPL-accepting merchants also
265、benefit from the provision of marketing support,reduced fraud and bad debt.These benefits are particularly pronounced for the small businesses accepting BNPL.Merchants with revenue of less than$5 million believe BNPL delivered a benefit of almost$20,000 over the past 12 months,or approximately 6 per
266、cent of their revenue.100 BNPL providers and their merchant partners have also made a substantial contribution to the Australian economy,supporting more than 99,200 local jobs through FY21 from total transaction volumes and spending,once flow-on effects throughout the economy are taken into account.
267、The maturity of BNPL in Australia means the benefits are well understood by merchants101 RFI Global,Merchant Survey,January 2022.Total n=702.102 RFI Global,Merchant Survey,January 2022.Total n=323.103 Ibid.104 Ibid.The maturity of BNPL in Australia means many merchants have been accepting it for som
268、e time.One in three BNPL accepting merchants surveyed have been accepting BNPL for more than two years and 70 percent have been accepting BNPL for more than 12 months,suggesting they are in a good position to assess the benefits and costs of acceptance.101 Merchants primarily begin accepting BNPL to
269、 attract new customers.20 percent of surveyed BNPL accepting merchants indicated winning additional business was their number one reason for beginning to accept BNPL and 57 percent indicated this was one of their top five reasons.54 percent of merchants indicated enhancing customer convenience was a
270、 top five reason for starting to accept BNPL.102 There is a high level of multiple BNPL service acceptance with many merchants choosing to offer more than one BNPL service in order to offer their customers maximum possible payment choice.Of the merchants surveyed that accepted BNPL,over 60 percent a
271、ccepted more than one BNPL service meaning customers can often choose between BNPL services as well as between BNPL and other types of payment options.103 Merchants also benefit from choice in terms of which BNPL services to accept and can,therefore,make the decisions they believe work best for them
272、.They also identify that each BNPL service offers them incremental value.Despite the high level of multiple BNPL service acceptance,37 percent of BNPL accepting merchants say they are very likely to start accepting another BNPL service in the next 12 months and a further 21 percent say they are some
273、what likely to.This intent seems to be indifferent to the number of BNPL services the merchant currently accepts.Ninety percent of merchants accepting BNPL promote this fact on their website,in store,in person or elsewhere.104Ultimately,merchants view BNPL services as complementary,rather than as su
274、bstitutes,for one another.With zero or minimal set up costs,there is no barrier to merchants accepting multiple services if they believe it is in the interest of their business and customers to do so.BNPL providers need to compete to maintain the allegiance/preference of merchants and this competiti
275、ve pressure is being reflected in the decrease in the fees charged to merchants over time and the increase in marketing and other support.Having adopted BNPL services,merchants have also found these services support their business in a variety of other ways,including helping their business through t
276、he COVID-19 global pandemic,adding credibility to their brand and improving the customer experience.Merchant case study We have a young customer base and offer a lot of premium and unique products.A lot of people want to pay in instalments for the must have item that they cant get anywhere else.When
277、 we introduced Afterpay on Restated Vintage we saw turnover roughly double,which was a great surprise.Restated Vintage When you have an experiential brand its also important to give people control and options throughout their entire shopping journey.How you pay is no exception to that.Ive always off
278、ered Afterpay to provide flexibility for people to choose what suits their needs.Our brand is about practical,unpretentious luxury.As part of that we want to make things inclusive,rather than exclusive.Afterpay is one way to help us do that.Grampians Goods Co.The Economic Impact of Buy Now Pay Later
279、 in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 39Page 38Figure 14:Key reasons why merchants originally began accepting a BNPL service105 Figure 15:BNPL accepting merchants opinions on BNPL106105 Ibid.106 Ibid.57%54%47%44%39%38%32%32%21%17%14%12%10%0%10%20%30%40%50%60%To win a
280、dditional/new customersImproved customer convenienceIncrease volume of purchasesDemand from existing customersI needed to offer it to remain competitiveImproved customer loyalty/repeat businessIncreased average value of purchasesImproved conversion/reduced purchase abandonmentTo differentiate from m
281、y competitorsLower customer service costsFraud reductionLower operational costsLower marketing costsWhy did your business originally begin accepting a BNPL service?%Rank 150%10%20%30%40%50%90%80%60%70%BNPL accepting merchants opinions on BNPL82%78%72%72%68%68%64%63%45%44%Customers now expect busines
282、ses to offer BNPLBNPL is here to stayBNPL is a competitive industryOverall BNPL has had a positive impact on my businessBNPL is good for Australian businessesAccepting BNPL adds credibility to my businessMy business would lose customers if we did not acceptThe benefits BNPL to my business are greate
283、r than theBNPL is helping my business to recover from the pandemicBNPL supported my business through the pandemicMerchants using BNPL gained$1.19 billion in net benefits in FY21107$626 millionThe total value of efficiencies gained by BNPL accepting merchants in FY21 due to their BNPL acceptance$496
284、millionThe cost of BNPL merchant fees for accepting merchants in FY21$1.19 billionThe total net benefits value for businesses through increased revenue and cost efficiencies 107 Based on BIS Oxford Economics analysis using survey data collected from BNPL providers by BIS Oxford Economics and AFIA in
285、 January-February 2022.and RFI Global survey data(December 2021 February 2022).108 Afterpay,(2022)Small Business,Big Opportunity.109 Ibid.110 Based on BIS Oxford Economics analysis using survey data collected from BNPL providers by BIS Oxford Economics and AFIA in January-February 2022.and RFI Globa
286、l survey data(December 2021 February 2022).Australian BNPL merchants accrued$1.19 billion in net benefits from BNPL in FY21.The gross merchant benefits from accepting BNPL,comprising incremental sales and cost efficiencies,total approximately$2.75 billion.Incremental sales represent the new revenue
287、that BNPL has helped accepting merchants generate,over and above their sales through non-BNPL channels.Cost efficiencies are the result of BNPLs ability to reduce the cost of doing business for merchants.This includes customer servicing,customer acquisition,marketing,reduced online returns,fraud red
288、uction and more.For example,the average Australian retailer experiences purchase return rates of between 9 and 20 percent of purchases.BNPL return rates are much lower at between 2 and 6 percent of purchases.Research has shown this to be because BNPL users utilise BNPL as a budgeting tool and are mo
289、re committed to their purchases,or because BNPL accounts are mainly linked to debit not credit cards-which tend to be associated with high return rates.108Figure 16:Breakdown of benefits for merchants accepting BNPL,FY21109 Figure 17:Estimation of BNPL merchant efficiency effects,Australia FY21110$m
290、illion0$329m$222m$53m$22m 100 200 300 400 500 600 700Marketing/customeroutreachCustomerservice costsOtheroperationalFraudTotal$626m$millionGross revenueincreaseIncreasedefficienciesCost ofsalesMerchantfeesBNPLnet benefit05001,0001,5002,0002,500-$1,069m$2,127m$626m-$496m$1,188mThe Economic Impact of
291、Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 41Page 40Merchants accrue benefits in many areas that drive growth94%of accepting merchants say BNPL has delivered at least one type of benefit11157%of accepting merchants adopted BNPL in order to win new custome
292、rs11260%Of BNPL accepting merchants say revenue would fall,by an average of 25%,if they stopped accepting BNPL113111 RFI Global,Merchant Survey,January 2022,n=323112 Ibid.113 Ibid.114 Based on BIS Oxford Economics analysis using survey data collected from BNPL providers by BIS Oxford Economics and A
293、FIA in January-February 2022.and RFI Global survey data(December 2021 February 2022).115 RFI Global,Merchant Survey,January 2022,n=323.116 Ibid.117 Ibid.Australian BNPL accepting merchants derived$2.13 billion in additional revenue in FY21 stemming from BNPL acceptance.114 This benefit is accrued in
294、 a number of key areas:1.Exposure to new customers:BNPL providers generally offer an online shop directory allowing merchants of all sizes to increase exposure to new customers.2.Improved customer convenience:BNPLs payment structure gives users more control over their repayment timing and support fo
295、r budgeting,generating more frequent repeat purchases for merchants offering BNPL.3.Competitive advantage:Consumers now expect choice in the way they can pay for goods and services and may switch merchants to use their preferred payment method.Merchants with turnover of over$5 million per annum were
296、 more likely to select this as a reason to start accepting BNPL.1154.Increased volume of purchases:This can be attributed to increased basket size and customer exposure,as well as greater brand relevance,increased website traffic,improved checkout conversion rates and higher rates of repeat purchasi
297、ng.5.Rise in loyalty and repeat purchasing:The result of connections through the online shop directory is brand relevance and engagement.BNPL users see merchant partners,no matter the size or product,as trusted and relevant.Millennials and Gen Z customers,who are becoming increasingly value consciou
298、s and comprise a large proportion of BNPLs user base,are continuing to make purchases through BNPL and this is only expected to grow.6.Larger customer basket size:Customer control over payments removes barriers to purchase at checkout and gives customers confidence to increase the value of their pur
299、chase.7.Improved checkout conversion:More checkout options and more seamless experiences at checkout directly relate to improved checkout conversion rates.In addition to the availability of BNPL at the point-of-sale,its fast registration process,ability to save customer information,and concept of pa
300、ying in instalments has led to improved checkout conversion.51 percent of BNPL accepting merchants say that BNPL has resulted in them winning additional customers and 50 percent say it has resulted in improved customer convenience.94 percent of accepting merchants say BNPL has delivered at least one
301、 type of the benefits that were listed.Benefits delivered to merchants by BNPL are fairly consistent with no significant differences based on the turnover of the business.116 In addition,BNPL accepting merchants are often experiencing benefits beyond those they expected with 45 percent saying the ov
302、erall benefit of BNPL acceptance has exceeded expectations-for example,they do not necessarily envisage improved customer experience,but BNPL often delivers this benefit.117 This demonstrates the value of the holistic benefits created by BNPL,where even if sales do not immediately increase,benefits
303、are gained through other means.Small businesses gain greater benefit fromBNPL BNPL provides more than just a payments solution for small businesses.BNPL providers actively support the growth and development of their merchant and retailer partners,which is particularly important with the shift happen
304、ing towards an increasing digital economy.This support is particularly valuable for small business owners that are time poor,may have low levels of digital literacy,and limited in-house resources to manage their technology interfaces with their customers.Support mechanisms include targeted marketing
305、 campaigns to generate higher sales volumes for small businesses and the provision of retailer resources for small businesses,including business growth case studies,business performance analytics,consumer shopping insights,and interactive and social media support,such as blog posts.BNPL is an import
306、ant cashflow management tool for small businesses.Offering BNPL also reduces the risk of credit card repayment default and time spent chasing overdue repayments,which is especially important for small businesses in the solar industry.BNPL accepting merchants with revenue of less than$5 million per a
307、nnum believe that BNPL has delivered a benefit of approximately$18,576 on average over the past 12 months.118BNPL accepting merchants with revenue under$50,000 are significantly more likely to agree BNPL is good for Australian businesses,that BNPL has added credibility to their business and that the
308、 benefits of accepting BNPL are greater than the cost of accepting it.119 118 Ibid.119 Ibid.120 Ibid.BNPL has supported Australian businesses through the COVID-19 global pandemic and economic recoveryOverall,54 percent of BNPL accepting merchants agree that BNPL either supported them through the COV
309、ID-19 global pandemic or is helping their business recover from the impacts of the pandemic,or both.BNPL accepting merchants with revenue over$5 million per annum are more likely to agree that BNPL supported their business through the pandemic and is now helping their business recover from the pande
310、mic.120BNPL accepting merchantsSurvey responses,December 2021 January 2022 It definitely helped bring in more sales!I wasnt getting many until I introduced BNPL.Most customers preferred shopping online than walking in store and because many people suffered reduction in work hours,paying cash was har
311、d for most lower to middle earners so introducing buy now pay later made it possible for customers to still purchase the items they needed hence boosting business revenue.BNPL gave customers more confidence with their purchases and a different opportunity for payment methods.(During the pandemic)My
312、BNPL provider sent a care package with lots of marketing tools for in store.They also added Etsy to the buy small page which gave us a lot of traffic and more sales.In todays climate,not many people have dispensable cash.Money has been tight because a lot of people have lost a job or have had to red
313、uce their hours.The people that do have cash might want to use it for some other upgrade.Theres a lot of people that want solar but dont have the money up front.Buy now,pay later makers it easy for anyone,on any budget.It is allowing the business to get back on its feet and allowing sales to increas
314、e.The Economic Impact of Buy Now Pay Later in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 43Page 42BNPL has helped Australian businesses generate$2.13 billion in net new sales in FY21121 Ibid.122 Ibid.123 Based on BIS Oxford Economics analysis using survey data collected from
315、BNPL providers by BIS Oxford Economics and AFIA in January-February 2022.and RFI Global survey data(December 2021 February 2022).51 percent of accepting merchants say their sales revenue has increased due to BNPL acceptance.When asked to quantify the benefit of acceptance,merchants believe BNPL has
316、delivered an average benefit of more than$25,880 over the past 12 months or an average 5.6 percent of their revenue.For businesses with a turnover less than$250,000 this is$7,219 which equates to an average 8.8 percent of revenue.For businesses with a turnover above$5 million the average increase in
317、 revenue in the past 12 months as a result of accepting BNPL is approximately$93,735 which equates to 1 percent of their average reported revenue.121On average,BNPL accepting merchants see 22.8 percent of their sales coming through BNPL services and this is consistent across businesses regardless of
318、 their size.A small proportion of merchants-13 percent typically see more than 50 percent of their monthly sales coming through BNPL.For merchants with annual revenue under$50,000 this is higher at approximately 20 percent of merchants.60 percent of BNPL accepting merchants say their revenue would f
319、all if they stopped accepting BNPL and these merchants predict a 24 percent average reduction in revenue if this scenario arose.122 Based on survey data collected from the eight BNPL providers that are Code signatories,evidence from RFI Globals consumer survey on what consumers would do if they coul
320、d not use BNPL and BIS Oxford Economics analysis,it is estimated merchants gained$2.13 billion in sales revenue in FY21 they would not have received without BNPL.123Merchant case study Our company name is Power Ideas,and we empower people to save or even make money by switching to solar.”There are t
321、wo reasons why people get solar.Theres the economic benefits,and then theres the feeling of doing something for the environment.People are worried about their bills.They dont want to be paying as much as they currently do for energy.Going with solar can reduce their energy bills and save them money
322、and BNPL helps them get there.A lot of people dont have the initial investment for solar.By offering Brighte we help them get the finance they need to convert their roof to money.If a customer gets finance from Brighte with$0 down payment and gets solar panels on the roof,they can pretty much cover
323、their energy bills with the savings.Its a real WIN/WIN situation for customers.When it comes to new finance options like BNPL we do need to educate our customers a little more.Our business is more comfortable taking an application with BNPL finance than with cash because it gives our team the assura
324、nce money will be coming in at specific times.This means that we can pay our installers and our suppliers.The cash flow is important.BNPL has also played a big role in allowing us to start our business in other states as well.Power Ideas,NSWLars Olav Gjelten/The Economic Impact of Buy Now Pay Later
325、in AustraliaThe Economic Impact of Buy Now Pay Later in AustraliaPage 45Page 44Costs for merchants accepting BNPLAs with other payment options,there are costs associated with accepting BNPL services.For merchants,BNPL is more than a payment processing service.There are no specific payment acceptance
326、 charges for BNPL,with the merchant fee incorporating a range of services,including cashflow support,increased sales,marketing support,advertising opportunities,access to hard-to-reach Millennial and Gen Z customers and lower fraud costs,mean merchants are incentivised to pay for BNPL services.BNPL
327、providers generally impose a no-surcharge rule that prevents merchants from passing on the cost of their fees to customers who use BNPL services.As BNPL providers collect more data over time about consumers shopping and buying behaviours,they will be able to provide a continually better service to m
328、erchants,including data insights and marketing and monitoring services,over and above traditional payments products.While the cost to merchants of accepting BNPL is typically higher than for other electronic payment methods,such as credit and debit cards,this is offset by the range of added benefits
329、 merchants receive.Among merchants accepting BNPL,the cost of acceptance is estimated by them to represent approximately 6 percent of their total business expenses.The cost of accepting other payment types is estimated to represent 5 percent and the cost of payment fraud is estimated to represent 3
330、percent.Merchant testimonial Weve generated higher value sales,with increased margins and therefore increased ourprofit.“On larger transactions I always put the actual Openpay deposit and repayment on the quote.I win a lot more of the higher quotes by breaking it down to repayments you remove the fe
331、ar of the big sale.Instead of a job being done in 2 tyres this month and 2 tyres next month,they get approved and we knock it out in a day.“We get new customers simply because we offer Openpay and lots of repeat business through it too(over 60 percent of BNPL customers are repeat customers).JAX Tyre
332、s&Auto services thousands of Australian members each month through a network of 88 stores across all states(excluding the Northern Territory).They specialise in tyres,wheels,servicing,batteries&mechanical services.Their offerings range from high-performance passenger cars to light truck and four-whe
333、el drive brands.Since partnering with Openpay,one JAX Tyres&Auto franchisee has averaged well over$500 on all BNPL transactions.Across the entire JAX Tyres&Auto network,average transactions with Openpay are up to 33 percent higher than everyday transactions.Jax Tyre&AutoFigure 18:Merchant average benefit over the last 12 months due to BNPL acceptance$18,576$93,735$25,880$0$20,000$40,000$60,000$80,
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