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Afterpay informed the Australian Senate that using cryptocurrency might reduce merchant payment costs and that the government should strive to develop a framework for a AUD-backed stablecoin.
Afterpay, an Australian buy now pay later (BNPL) company, believes that using cryptocurrency can help local merchants reduce payment expenses.
Afterpay argued in a submission to the Senate enquiry into “Australia as a Technology and Financial Center” that using blockchain-based transactions might reduce expenses associated with traditional payment methods, such as card issuer, network operator, and banking fees:
“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.”
The client would bear the expense of verifying the payment on the blockchain under the crypto model. Depending on the cryptocurrency and blockchain used in the transaction, as well as how congested the network is at the moment, this could be reasonably inexpensive or pricey.
Afterpay noted that if such a scenario occurred, transaction fees would be clear, and clients would be given the option to “wait for more favourable network conditions and a reduced cost” before conducting transactions.
The inquiry is investigating a broad range of factors related to financial technology, such as the economic and employment opportunities posed by crypto and blockchain tech, barriers to the uptake of new technologies, and the impact of corporate law “restraining new investment” in Australia. Afterpay will be speaking before the Senate committee later on Wednesday.
While BNPL competitor Zip has announced ambitions to offer crypto trading services to its consumers in Australia and the United States, Afterpay has yet to declare any plans to engage with digital assets. However, in a $29 billion stock deal announced on Aug. 1, crypto-friendly payments firm Square purchased Afterpay, which might see the firm enter the market in the future.
Afterpay stated in its Senate report that it “does not now sell crypto-related goods,” but that it is “actively researching” how novel fintech capabilities could function as a part of the alternative financial platform.
Stablecoins down under
Concerning stablecoins, Afterpay stated that the Australian government should collaborate with the crypto sector to determine what the “framework an appropriate environment for a AUD-backed stablecoin should look like.”
According to Afterpay, the goal should be to offer stablecoin users with asset security while also regulating it in a way that does not inhibit fintech innovation in Australia.
“This includes considering if regulatory instruments are required for stablecoin issuers to have transparent and adequate prudential reserve holdings, consumer-focused data protections and fair and appealable processes in place regarding account blacklisting,” it said.