Afterpay shares its views on cryptocurrencies in the Australian payments’ space.
The post Here’s why Afterpay (ASX:APT) is making news again appeared first on The Motley Fool Australia. –
The Afterpay Ltd (ASX: APT) share price closed in the red on Wednesday.
Afterpay shares were on the move after the company filed a submission to the federal Senate select committee investigating “Australia as a Technology and Financial Centre”.
Let’s investigate further.
Why is Afterpay making the news again?
Afterpay is making headlines again after sharing its views that a transition of payments services to allow blockchain technology could reduce payment costs for merchants.
The buy now, pay later (BNPL) company urged the Australian government and Reserve Bank of Australia (RBA) to allow policymakers to develop an Australian “stablecoin”.
For reference, a stablecoin is a type of cryptocurrency that has a relatively ‘stable’ price. Usually, this is achieved by pegging itself to an already established currency, such as the US dollar or Australian dollar for instance.
These stablecoins attempt to solve the problem of extreme volatility in cryptocurrency markets.
Afterpay does not offer any cryptocurrency-related services or payment methods at the moment. However, it told the Senate select committee that “growing FinTech businesses” have business models that have not been “contemplated by pre-existing regulatory frameworks”.
Consumers’ changing preferences
The call is as much is a reflection of the current payments services landscape where merchants have been forced to adapt to the demands of consumers in the modern FinTech world.
Afterpay echoed this sentiment in its submission, stating its customers “now expect to be able to access more flexible ways of paying” for retail services.
The company is therefore adamant blockchain will be of immense benefit to merchants, removing intermediaries such as banks and credit card companies from the equation.
This would have the net effect of reducing transaction fees associated with card payments, according to Afterpay.
US payments giant Square, Inc, which is in the process of buying Afterpay in a $39 billion transaction announced in August, already earns “significant revenue” from Bitcoin, the flagship cryptocurrency that uses blockchain technology, according to a report in today’s Australian Financial Review.
Square recognised a 200% year on year increase in its Bitcoin revenue in the last quarter to US$2.7 billion and owns 8,027 Bitcoins, according to the report.
The Senate enquiry is ongoing and heard further commentary from Afterpay senior executives on Wednesday. It remains unclear if the Australian government has any intention of developing an Australian stablecoin.
Afterpay share price snapshot
The Afterpay share price has had a choppy year to date, having posted a return of 10% since January 1. It is also down 1.6% over the past month.
Despite this, Afterpay shares have climbed 73% over the past 12 months.
This has outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of around 25% over the past year.
Should you invest $1,000 in Afterpay right now?
Before you consider Afterpay, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Afterpay wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Here’s why the Afterpay (ASX:APT) share price is up 5% in a month
Afterpay (ASX:APT) share price edges higher amid increasingly crowded BNPL space
Here’s a look at how ASX WAAAX shares compare on growth
The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.