Here's why Afterpay (ASX:APT) is making news again

Afterpay shares its views on cryptocurrencies in the Australian payments' space.

A young woman working in a coffee shop holds a sign saying: 'Bitcoin accepted here'

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Afterpay Ltd (ASX: APT) share price closed in the red on Wednesday.

Afterpay shares were on the move after the company filed a submission to the federal Senate select committee investigating "Australia as a Technology and Financial Centre".

Let's investigate further.

Why is Afterpay making the news again?

Afterpay is making headlines again after sharing its views that a transition of payments services to allow blockchain technology could reduce payment costs for merchants.

The buy now, pay later (BNPL) company urged the Australian government and Reserve Bank of Australia (RBA) to allow policymakers to develop an Australian "stablecoin".

For reference, a stablecoin is a type of cryptocurrency that has a relatively 'stable' price. Usually, this is achieved by pegging itself to an already established currency, such as the US dollar or Australian dollar for instance.

These stablecoins attempt to solve the problem of extreme volatility in cryptocurrency markets.

Afterpay does not offer any cryptocurrency-related services or payment methods at the moment. However, it told the Senate select committee that "growing FinTech businesses" have business models that have not been "contemplated by pre-existing regulatory frameworks".

Consumers' changing preferences

The call is as much is a reflection of the current payments services landscape where merchants have been forced to adapt to the demands of consumers in the modern FinTech world.

Afterpay echoed this sentiment in its submission, stating its customers "now expect to be able to access more flexible ways of paying" for retail services.

The company is therefore adamant blockchain will be of immense benefit to merchants, removing intermediaries such as banks and credit card companies from the equation.

This would have the net effect of reducing transaction fees associated with card payments, according to Afterpay.

US payments giant Square, Inc, which is in the process of buying Afterpay in a $39 billion transaction announced in August, already earns "significant revenue" from Bitcoin, the flagship cryptocurrency that uses blockchain technology, according to a report in today's Australian Financial Review.

Square recognised a 200% year on year increase in its Bitcoin revenue in the last quarter to US$2.7 billion and owns 8,027 Bitcoins, according to the report.

The Senate enquiry is ongoing and heard further commentary from Afterpay senior executives on Wednesday. It remains unclear if the Australian government has any intention of developing an Australian stablecoin.

Afterpay share price snapshot

The Afterpay share price has had a choppy year to date, having posted a return of 10% since January 1. It is also down 1.6% over the past month.

Despite this, Afterpay shares have climbed 73% over the past 12 months.

This has outpaced the S&P/ASX 200 Index (ASX: XJO)'s return of around 25% over the past year.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Technology Shares

group of traders cheering at stock market
Technology Shares

What drove a 10% surge in ASX 200 tech shares last week?

The ASX 200 roared to a 2-month high on Friday, with tech shares leading the 11 market sectors last week.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Technology Shares

Why is the Block share price crashing 33%?

This payment giant's shares are being hammered today. But why?

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Technology Shares

These ASX 200 tech stocks could rise 20% to 35%

Goldman Sachs is tipping these shares to rise strongly from current levels.

Read more »

A corporate team or board stands together and looks out the window.
Technology Shares

WiseTech shares charge higher on $3.5b acquisition news

This tech stock is ending the week positively. But why?

Read more »

A man leans forward over his phone in his hands with a satisfied smirk on his face although he has just learned something pleasing or received some satisfying news.
Technology Shares

3 reasons to buy this $25 billion ASX 200 tech stock today

A top expert forecasts more outperformance from this fast-growing ASX 200 tech stock.

Read more »

Lines of codes and graphs in the background with woman looking at laptop trying to understand the data.
Technology Shares

Why is the Brainchip share price crashing 9% today?

The semiconductor company is being sold off on Tuesday. But why?

Read more »

A man with a wide, eager smile on his face holds up three fingers.
Technology Shares

3 reasons this sold-off ASX 200 share is primed for a big rebound

A leading expert believes this ASX 200 share is well placed to outperform.

Read more »

a man surrounded by huge piles of paper looks through a magnifying glass at his computer screen.
Technology Shares

I did some research on Siteminder — Here's what you should know

The big questions I'm monitoring for answers.

Read more »