PayPal won’t hurt us, says Afterpay’s Anthony Eisen

Afterpay co-founder Anthony Eisen is relaxed about increasing competition in the booming buy now, pay later sector, including PayPal’s entry into the local market.

Afterpay co-founder and CEO Anthony Eisen. Photo by Natalie Grono

Afterpay co-founder and CEO Anthony Eisen is relaxed about increasing competition in the booming buy now, pay later sector, saying the industry is “a rising tide” right now.

Hours after PayPal launched its buy now, pay later service in Australia, Mr Eisen said he didn’t see the payment giant’s entry into the market as having an impact on Afterpay’s growth prospects.

“We’ve had (competition) since day one. Obviously there’s more people coming into our space because it’s been illustrated to be so fundamentally important to this next generation,” Mr Eisen said at an event in Sydney.

“Our biggest market now is the US: we have well over eight million customers there that are active. And PayPal has been in that market with pay-in-4 for a while.

“We actually see it as a rising tide at the moment. It hasn’t changed our pipeline or our engagements with merchants or our growth. So we see that ability to continue.”

Mr Eisen also addressed the challenges around regulating the industry, saying Afterpay “didn’t fit into a box” when it launched.

“It’s very difficult, with the history of regulation and some defined industry constructs, to then move into an area where technology is a little bit of a blur, a leveller.

“We’re a retail company. We didn’t come from finance or payments, yet all of these concepts are now coexisting in a way that’s servicing the customer in a way that meets their demands.”

Making sure consumer protections were paramount, while also allowing for competition and choice had been “quite a journey”, but the dialogue with regulators had been very good, he said.

Earlier, ASIC deputy chair Karen Chester flagged that Afterpay and its peers would be the first target of the regulator’s new design and distribution regulations due to come into force in October.

Ms Chester said the Design and Distribution Obligations (DDO) “represent a true step-change in financial services regulation – the frontier of outcomes-based regulation.”

“The first near-term cab off the rank will be buy now, pay later firms,” she said.

Elaborating further in comments following her speech, Ms Chester said she thought BNPL was “awesome for most consumers” but a “very expensive form of credit” for one in five users.

“This us why DDO and outcomes-based regulation is such a game changer.

“It allows us to go in with precision and just deal with where the harms are occurring”.

ASIC is particularly concerned with high late payment fees at some BNPL providers, she said.

“DDO allows us to let the BNPL guys get their business models right, get their target market determinations right, and then we don’t need to do anything.”

Afterpay shares surged 8 per cent on Wednesday to $117 after US technology stocks rallied overnight.

The market darling’s share price jump came after it slid below $100 a share on Tuesday, 37 per cent below its February highs in a decline that saw founders Mr Eisen and Nick Molnar suffer paper losses on their personal fortunes of more than $2bn.

The jump came after the Nasdaq enjoyed its best one-day gain since November, climbing 3.7 per cent a day after it slid into correction territory.