After 5 years, BNPL is still a tiny niche

BNPL providers are still a tiny proportion of the payments market. Picture: AAP

Actual consumer payments plunged a massive $16 billion or 25 per cent in April according to data produced by the RBA.

The data looks at actual spending, as opposed to ABS data which is based on survey. McLean’s Grant Halverson says these are the worst numbers he has seen in 35 years in the game.

The difficulties in global economies were underscored early on Thursday morning when US Fed boss Jerome Powell said the central bank was “not even thinking about raising interest rates”. Most on the Fed see the first increase coming in 2023.

This news was initially welcomed by US investors, because low interest rates means there is nowhere else to invest but stocks. But the other side of the coin is that the decision means Fed is not raising rates because the US economy is in real trouble. So US markets closed down on the latter realisation and the Australian market was down 1.8 per cent in morning trade.

Locally, the ABS has reported retail sales as being down 17 per cent but Wesfarmers n a statement earlier this week noted the downturn is not across the board with Bunnings and Office Works reporting increases.

The RBA data also highlights the hype behind “buy now pay later” stocks given their tiny, less than 1 per cent, share of the payments system.

By the RBA data, in April total payments were down 25 per cent, credit card sending was down 33 per cent, debit card spending was down 10.1 per cent, ATMs by 40 per cent and prepaid cards by 51.6 per cent.

These figures, which compare totals in April to those in April last year, and also cast doubt on the so-called boom in online spending, given 92 per cent of all online purchases are made by card.

The Australian payments system measures just over $1 trillion in spending each year with debit cards having the biggest share at 35 per cent followed by the RBA digital payments platform which has 29 per cent.

Debit card spending totals $300 billion and buy now pay later spending totals $6 billion or less than one per cent of the market with six million customers.’

This compares with prepaid cards at $7.3 billion and 11.4 million customers.

If we are talking about revolutions led by After Pay, Zip et al, then it’s a long time coming given the concept has been around for five years or more.