The AfterPay Touch Group Ltd (ASX: APT) share price is up 14% to $19.61 this morning after news out of a government inquiry suggested the buy-now-pay-later consumer credit provider will avoid any tough new regulations.
There were fears among some shareholders that AfterPay would be forced to undertake onerous new credit or identity verification checks on its existing and new customers that could have sent costs through the roof.
However, various news outlets are reporting that the Senate committee will not recommend that AfterPay is covered as a reporting entity under legislation designed to ensure designated credit providers stringently assess the ability of customers to pay debt back.
Credit and identity checks can cost varying amounts of time and money for different entities (depending on how they're regulated) from nothing much more than an automated box ticking exercise to more stringent credit history and ID checks conducted in-house or provided by outsourced credit reporting providers such as Veda.
Identity verification checks can be demanded of a varying standard according to how an Australian Financial Services Holder is regulated for example if you are a money transfer business you will be considered higher risk due to money laundering issues and required to complete more stringent and costlier ID verification checks such as obtaining an ID copy.
However, a credit provider like AfterPay can usually use less costly automated systems in order to "verify" a customer's identity after they have just provided their name, address, and mobile number online for example.
AfterPay is also expanding into the US and UK at a breakneck pace and politically it would not look good if the government was seen to be holding back innovative fintech businesses given the emphasis on new technologies creating jobs and bolstering the economy.
AfterPay is due to hand in its interim profit report later this week.
