American Philosopher John Francis Bongiovi Jr, (otherwise known as Bon Jovi) once famously and sagely remarked, (admittedly taking his lead from Jean-Baptiste Alphonse Karr), that ‘it was all the same, only the names have changed.’

In previous decades, technological upgrades led to telephone delivery services allowing for pick up pizza and takeaway collections, and buy now, pay later services were provided to allow customers ‘lay-buy’ solutions at retail chains. Now, with further development in the sector, technology has once again managed to disrupt a market it somewhat already reshaped.

UberEats and companies akin to it, and their ability to repackage and premiumize an existing concept is now infamous. However it is a combination of fortuitous timing, ever-present demand and effective execution that has led to several Australian Omnichannel payment solutions launching a multi-billion-dollar fintech industry, with Australia as a global pioneer in this space, becoming a serious revenue growth sector for the Australian economy as well as investors interested in it.

As of February 2018, Afterpay is used by more than 1.5 million Australians, and this number is sure to have increased astronomically with almost 95,000 new accounts being opened every week in Australia. Afterpay currently accounts for 10 percent of online sales, and about one in every four Millennials in Australia use the platform.

Crucially for early investors in these companies, since the announcement of the royal commission into banking on the 14th of December 2017, the market has shifted quite drastically. Back in December 2017, Afterpay (APT) was valued at a still impressive $5.30, but as of the time of publishing (15/5/2019) is sitting at a relatively astronomical $26.00, having recently reached a peak of $28.64c. Main market competitor Zippay (Zp1) strangely listed just one day after the royal commission announcement at $0.65 and is currently sitting at $3.40c on day of publishing.

There also seems to be unique thinking within the applications of the technology as well, which could be an explanation for the extraordinary faith shown in the companies by Australian shareholders. New fintech Cloudfloat is looking to instil the basic principle of companies like Afterpay, but this allows companies to distribute B2B invoices directly through the application, with small companies given 90 days of wiggle room to pay back the entirety. ABN holders can hopefully look to see increased short term revenue as well. With freelance creatives and tradesmen accustomed to not receiving funds until a job is complete, hopefully these Fintech companies will provide more immediate access to cash flow.

Afterpay is set for further interesting moves, setting its sights on a UK Launch, slightly rebranding as Clearpay. The UK market is valued at $720 billion, with $130 billion of this online. By comparison, the Australian market is $320 billion with online worth just $30 billion. There is also much interest from a political perspective for the reception of the company in the Kingdom, with narratives around payday loans being a consistent point of heated social debate (especially with Wonga recently collapsing into administration).

This style of banking seemingly has prolonged shareholder support, and is apparently here to stay. With this confidence, other companies in the sector are beginning to throw their hat into a ring which is clearly full of hungry shareholders as well. New rivals on the market Openpay, Marketlend, Humm (which actually also provides larger loans) and Splitit will be looking to expand their reach and take on new customers. Credit giant Mastercard has even recently announced it is beginning to enter the fray after recently acquiring by now, pay later platform Vyze, a similar product within the space.   

The Afterpay and ZipPay story itself is most interesting not just in the way that they have revolutionised the sector, but how faith in the disruptive technology has changed the game in a volatile market has rewarded shareholders who have exercised their knowledge of the sector and the market conditions.

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