I occasionally receive requests to integrate into Buy Now Pay Later (BNPL) services like AfterPay and ZipPay.

I have for the most part up until very recently strongly pushed back on these requests. I believe these services are predatory and harmful, and in particular predatory and harmful to our industry. I suspect that rollout of such services can, if circumstances are right, actually cause dealerships to become less profitable. That such a scenario is not just mathematically possible but quite likely to occur and eventually an inevitable outcome if BNPL services become a dominant method of payment. The exact rationale for my views here are covered in this document which I have shared with a few dealers to date and I am now making available on the c9 website.

Afterpay and other fintech solutions – impacts on retailers and ways to mitigate [PDF]

The core issue is excessive merchant fees for these services which can reduce effective profit on an individual sale by almost 40%. With sufficient channel cannibalization, (described in linked document above), your reported profit on your financial statements will be in total, actually drop by offering such services. You could install AfterPay into your business, increase your sales but actually, unintuitively, make less money as a result had you not done this.

These services may work well in high margin businesses but are risky and potentially harmful in low margin industries such as the motorcycle industry.

The mitigation strategy I proscribe involves adding surcharges to pass on fee costs to consumers. On assumption this was possible my position on integrating into AfterPay and ZipPay had softened in recent months and I was planning on integrating early 2020.

Except that Merchant Agreement all these services provide explicitly prohibit passing on surcharges. My willingness to integrate these technologies into c9 were contingent on being able to provide you with tooling to facilitate surcharging. Integration from c9 to any given BNPL service will not happen until that service permits surcharging.

There are many media reports over the last few days regarding Reserve Bank of Australia reviewing this as a matter of policy action. [Link from AFR]. I believe it is inevitable that relevant government bodies in Australia will compel AfterPay and others to permit surcharging for reasons I won't go into here as this blog post is already long enough.

The question is how quickly will Australian regulatory bodies move on this. Once this happens c9 will onboard with BNPL integration with AfterPay and ZipPay. Until this happens there will be no development effort committed to making integration happen. I am not prepared to lend my expertise and skill to aid an enterprise I believe is predatory and harmful, not without being able to add mechanisms that will help mitigate the elements I consider to be most egregiously predatory.

-- Barney