Afterpay hits back at ASIC report on essentials spending and debt

Afterpay says there’s no correlation in the use of Afterpay and either an ‘increase or decrease in spending on essentials’.

ASIC’s report into buy now, pay later, released Monday, found 21 per cent of users said they had missed a payment in the past 12 months. Picture: AAP

Afterpay has hit back at claims from ASIC that its users are missing out on essential items due to buy now, pay later accounts, with the company’s executive vice president Damian Kassabgi declaring that it has “very small amounts of debt” relative to its size and marketshare.

Speaking at a UBS Australasia conference, Mr Kassabgi said that ASIC’s own research found that Afterpay has over 70 per cent of the marketshare, but less than 30 per cent of the consumer debt.

ASIC’s report into buy now, pay later, released Monday, found 21 per cent of users said they had missed a payment in the past 12 months, while 20 per cent said they had missed or cut back on essentials such as meals.

Afterpay executive vice-president Damian Kassabgi. Picture: LinkedIn.

“When we are thinking about late payments and consumer outcomes, we don‘t think that the focus is on our particular service, and we checked that,” he said. “We looked at 144,000 Afterpay users and found that there was no kind of correlation in relation to the use of Afterpay and either an increase or decrease in their spending on essentials. If anything, where we do see potentially problematic behaviour is a fact that we know that credit card debt now and credit cards that involve an interest payment, around 40 per cent of that debt is for essential purchasing in the economy.”

Mr Kassabgi, who serves as Afterpay’s executive vice president for public policy and communications, also responded to a UBS report, which suggested Afterpay users are overrepresented in terms of the percentage of its users on JobSeeker benefits. The UBS survey covered 400 buy now, pay later users, and within that 70 Afterpay users, and claimed that 18 per cent of Afterpay users were on JobSeeker.

“We checked that, and we used a sample size of 144,000. It wasn’t a survey, we looked at actual banking and transaction data,” Mr Kassabgi said.

“And what we what came up with from this, looking at actual bank accounts, is that, in fact, Afterpay users were less likely to have had JobSeeker land in their accounts than the general population. And that’s not even comparing it to their same demographic and we know that some of the JobSeeker payments were skewed to younger audiences.

“So from a quality of customer perspective, as well as a losses perspective, we were quite confident that our model will produce not only good outcomes in the economy and reflected in the way the government is getting in relation to a regulatory stance.”

Elsewhere, Mr Kassabgi said Afterpay welcomed ASIC’s report, in which the regulator said it will not treat BNPL players the same as credit cards, but did introduce new design and distribution obligations that should be operation by October 2021.

“We think it is insightful, and brings up a number of core matters, including consumer-driven demand for innovation,” he said.

Afterpay shares were down 0.44 per cent to $101.40 before the market was paused due to a technical error.