Australia’s Senate was informed by Afterpay that the use of cryptocurrency might lower payment costs for merchants and that the government should seek to develop a framework for a stablecoin backed by the Australian dollar.
Afterpay, an Australian buy now pay later (BNPL) company, believes that using cryptocurrency can help local retailers reduce payment expenses by as much as 50%.
Afterpay stated in a submission to the Senate inquiry into “Australia as a Technology and Financial Center” that the use of blockchain-based transactions would reduce the fees associated with traditional payment methods, including those charged by card issuers, network operators, and financial institutions:
“Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation and the customer/payer bears the transaction costs.”
According to the cryptographic paradigm, the client would be responsible for the cost of authenticating the payment on the blockchain on their behalf.
This could be either quite inexpensive or prohibitively expensive, depending on which cryptocurrency and blockchain are used in the transaction, as well as how busy the network is at any particular time.
When asked what would happen if such a scenario occurred, Afterpay replied that transaction prices would be transparent and that users would be given the option to “wait for more favorable network conditions and a lower cost” before proceeding with transactions.
There are a wide range of factors being investigated by the inquiry in relation to financial technology, including the economic and employment opportunities presented by cryptocurrency and blockchain technology, barriers to the uptake of new technologies, and the impact of corporate law in Australia that is “restraining new investment.” Later today, Afterpay will testify before a Senate committee on labor and employment (Sept. 8).
While BNPL competitors Zip have stated that they intend to offer cryptocurrency trading services to their Australian and United States-based customers, Afterpay has not stated whether or not it intends to deal with digital assets.
Although Square, a crypto-friendly payments provider, recently purchased Afterpay in a $29 billion stock deal disclosed on August 1, the firm is not expected to enter the market in the near term, according to the company.
Afterpay stated in its submission to the Senate that it is committed to protecting consumers “Although the company does not currently offer cryptocurrency-related products, it is actively “considering” how innovative fintech features could function as a part of the alternative financial platform, according to the company.
Regarding stablecoins, Afterpay stated that the Australian government should collaborate with the cryptocurrency industry to determine the “framework that would provide the optimum setting for a AUD-backed stablecoin.””
According to Afterpay, the goal should be to give stablecoin users with protections regarding the asset while also ensuring that the asset is regulated in a way that does not inhibit innovation in the fintech sector in Australia.
According to the report, “this includes determining whether regulatory instruments are required for stablecoin issuers to maintain transparent and adequate prudential reserve holdings, consumer-focused data protections, and fair and appealable processes in place regarding account blacklisting,” among other things.
