Afterpay has taken out the Deloitte Fast 50, with average revenue growth of over 8,000 percent over the last three years.
Cofounded by Nick Molnar and Anthony Eisen, Afterpay has gone from strength to strength in Australia and overseas: it has almost 1,000 retailers on board following its US launch earlier this year.
Second in line on the Fast 50 list was NBN internet service provider Mate Communicate with growth of 3,703 percent, while Superloop, a provider of connectivity and managed tech services, came in third with 1,860 percent growth.
Fintech was well-represented on the list, with almost a quarter of the entrants working in the space; software was next in line with 22 percent, and IT and communications companies in third with 20 percent.
Josh Tanchel, lead partner of the Technology Fast 50, said fintech companies like Afterpay, Zip, and Prospa are “genuine success stories” for Australia and “reminders of how fresh thinking fintechs are fundamentally changing the ways we pay for goods and manage our finances”.
“In some ways it’s not surprising that they attract attention in the current environment, but, as we saw with another Technology Fast 50 company, Prospa, last year, the good models do withstand scrutiny and deserve support,” he said.
“More broadly, it remains important that, as tech entrepreneurs continue to drive change, they maintain a customer focus and a ‘profit for purpose philosophy’.”
The growth of such companies comes as regulators try to keep up with the pace of change and determine how to regulate them.
With the loan terms of banks and alternative lenders coming under scrutiny from the Australian Securities and Investments Commission (ASIC) and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) over the last year, Prospa was queried by ASIC ahead of its planned ASX listing in June.
Originally delaying its listing for 48 hours in order to respond, it then postponed the listing indefinitely before amending its loan terms in September.
Afterpay too is soon set to be looked at in an inquiry.
Its shares fell last month following the Senate’s voting to establish an inquiry into ‘debt vultures’, or the likes of debt management firms, pay day lenders, and buy now, pay later services such as Afterpay.
In a statement issued to the ASX, Afterpay stated it “welcomes the opportunity to participate in any review to ensure an informed discussion takes place in an appropriate forum and that the differentiated nature of Afterpay’s service is clearly understood.”
Explaining that the buy now, pay later category is a relatively new concept that has “been applied broadly and inconsistently between several operators with very different characteristics”, Afterpay stated that its service is “highly differentiated from others in that category and outside of it”.
In a submission to the inquiry, however, the Financial Rights Legal Centre stated that buy now, pay later services make it easier for people in debt to “fall into yet more debt”, and those who may be rejected by other regulated credit providers “can indebt themselves more easily to these unregulated providers since they do not have to assess a person’s ability to repay under responsible lending laws”.
One of the key issues is late fees: 24 percent of Afterpay’s income in the 2017-18 financial year was comprised of late fees.
In addition, the Financial Rights Legal Centre stated that while Afterpay does not charge interest, retailers pass on the cost of their fee to consumers by building it into the price of a product.
Afterpay was also top of the Fast 50 Leadership list, followed by Superloop and Youfoodz.
Image: Afterpay’s Nick Molnar.
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