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Last year saw BNPL, now a $100 billion global industry by one estimate, take the English-speaking world by storm, but nowhere is its future clearer than in the most developed of its markets: Australia.
One leading player there is set to grow the value of its transactions by 42 percent in 2022, with the Australian pay-later sector as a whole projected to grow by a whopping 45 percent this year, according to Argus Advisory Research.
Enthusiastically adopted by younger consumers, in particular, the market continues to boom there, with major acquisitions of leading players indicating the antipodean nation's global importance for retailers and consumer lenders the world over. The format's soaring value growth which, for B2C e-commerce alone multiplied fiftyfold between 2015 and 2021, has also led to traditional banks offering interest-free instalment loan credit cards. It has also led to some corporate acquisitions, most recently that of Latitude making a $242m bid for the BNPL business of Sydney-headquartered Humm, which ranks third in the market for both the number of merchants and value of transactions, according to Argus Advisory Research's research report on cards and digital payments in Australia.
However, as AAR's data shows, Humm is significantly smaller than market leader Afterpay, which has led American fintech Square (recently renamed as Block) to launch a takeover bid for the company, founded only in 2014, for an eye-watering $29 billion. Square is not the only instalments-centred company catching the attention of American payments stalwarts: American Express, for example, turned to Opy, the US unit of Australia's Openpay, for its longer-term instalment solution for customers needing to handle big-ticket purchases such as healthcare and auto-related expenses.
For all of this commercial activity, BNPL still bears the hallmarks of a nascent sector, burning rapidly through investment cash to gain market share and only developing an industry code of practice last year amid media reports of bad outcomes for tardy borrowers. Federal-level regulation from Canberra is currently in the works, with the government reportedly crafting an ambitious and wide-ranging set of proposals to encompass not only instalment lending but also digital wallets and central bank digital currency.
However, the excitement around instalment lending at the point of sale should not be taken as a sign that cards are on the way out: Australians' penchant for such payments remains undimmed. For 2021, overall card payments purchase volume reached an estimated $566 billion. The aggregate transaction values of both formats still dwarf BNPL's total transactions value, which stands at an estimated $9.5bn as of the year just ended. Within the cards arena, the big winner in recent years has been debit, although credit card purchase volume has returned to its growth track, having come through a sharp reversal in the first year of the pandemic.
This new report on Australia's cards and payments is one of scores of individual country reports, each with unique profit pool metrics and analysis, published by Argus Advisory Research. Leveraging data reaching back to 2010 – and forecasts up to 2024 – the unique data set features over 250 metrics for each market. Featuring appendices that set out the market positions of the leading BNPL lenders, this publication comes with 47 detailed data tables as well as informative and carefully compiled charts.
Each market report takes a consistent approach, with clear-sighted commentary and in-depth data providing comparable insight across markets. The Australia country report is available for subscribers to download now, or to order online.
All figures in this article are in US dollars unless otherwise indicated.
About Argus Advisory Research The market-leading online, interactive database and data dashboards covering the global cards and payments industry in detail, plus a range of data-packed country and regional reports. Leveraging financial cards data going back to 2010 – and forecasts up to 2022 – our unique datasets cover countries around the world and feature more than 250 metrics per market.