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Australian entrepreneur says blockchain the only way BNPL will survive

Australian entrepreneur says blockchain the only way BNPL will survive | Fintech Finance

A new type of BNPL platform is promising to transform the market and address the biggest risks and shortcomings of the current BNPL business models. While the lack of regulation has helped BNPL firms grow rapidly and keep costs down, it is inevitable tougher rules will arrive and profit margins will be squeezed. Australian entrepreneur Adam Mazzafero believes BNPL based on blockchain is the only viable alternative if these companies are to prosper. His team has been quietly building the world’s first blockchain crypto-based BNPL super-platform they believe will revolutionise the industry. Mazzaferro’s @Pay is positioning as a global solution to support existing BNPL companies and help them dramatically minimise their costs.

 

The new platform due for launch in 2022 uses a smart contract framework to automate every function within the scope of the transaction including funding, execution and payments, re-payments and even rewards. All current BNPL companies rely on payments from retailers of around 3 to 4% of the cost of goods sold using their platforms. Add in the cost of marketing, bank interchange, network fees, issuer processing fees, credit losses and funding, there is little left for the provider. None of the world’s big three standalone BNPL firms are currently making a profit.

 

Sydney-based entrepreneur Adam Mazzaferro says the solution is a platform based on a decentralised blockchain-driven platform that eliminates many of the fixed costs and risks carried by current BNPL providers. He says a comprehensive smart contract framework built on fast and cost-effective blockchains is the only way a provider can scale and turn a profit. He said @pay was built on the Algorand and Solana blockchains which are emerging as the main global standards for speed and security.

 

“It is clear BNPL as a standalone business is probably not viable based on current figures published by the main companies.  While the lack of regulation has helped BNPL firms grow rapidly and keep costs down, it is inevitable this will change.

“Combine greater regulation with a rise in the cost of funding and traditional BNPL firms are set for more pain, this is why we have been developing a new approach which we see as the only alternative.

 

Mazzaferro believes cryptocurrencies and blockchain will allow the development of a new model for BNPL which also enables prudent financial practices and responsible spending.

“Using blockchain also means the provider of the service is able to run the business at a lower cost and potentially achieve profitability much faster. It opens the door to the platform become a so-called super app where users can transact a range of products and services within an ecosystem where they are rewarded.  It also means users can use a blockchain-powered service without incurring interest or late fees.

“These powerful new protocols empower prudent financial practices by rewarding users who successfully repay purchases. Being DeFi-based means significant cost savings to traditional BNPL products, a robust ecosystem for shoppers and merchants, all within an ecosystem rewarding financial responsibility, ” he says.

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