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Who’s afraid of the RBA? Savers and Afterpay investors as shares sink

The Afterpay Touch Group Ltd (ASX: APT) share price is now down 19% this week on the back of a bearish research note of UBS backed up by a broadside from the RBA in its annual report into the payments system that’s hot off the press today. 

Earlier in the week UBS flagged a number of risks for Afterpay, including rising competition in the U.S. and tighter regulation in coming to a 12-month share price target of just $17.25.

Around half the amount shares were changing hands for prior to the analysts’ note. 

However, the RBA might have dropped a bigger bombshell this afternoon by flagging that it’ll consider any “policy issues” over the growth of the buy-now-pay-later (BNPL) sector in Australia. 

According to the central bankers: “Merchants pay fees to the BNPL provider that are typically much higher than the fees they would pay on other payment methods, such as credit and debit cards. Most BNPL providers also have rules that prevent merchants from levying a surcharge on the customer to recover those fees. This can be problematic for merchants that feel compelled to offer BNPL services as a payment option for competitive reasons, but are unable to recoup the merchant fees from the customers that directly benefit from the service.”

Fortunately for Afterpay investors it’s not the central bank’s job to legislate, but Afterpay’s surcharge bypass was also flagged as potentially up for regulatory review by UBS’s analysts in their note. 

As a consequence any changes to Afterpay’s regulatory status could make the surcharge ban an unfair term or inequitable.

However, it’s no secret that many retailers already offering Afterpay bump up prices marginally in the form of an undisclosed surcharge to protect margins. 

For now all this regulatory conjecture remains speculation on subjective commentary. However, skittish investors aren’t waiting around for more bad news, with Afterpay shares down 7% today alone. 

It’s getting hairy for WAAAX investors 

Elsewhere in the popular tech sector WiseTech Global Ltd (ASX: WTC) shares are in a trading halt as it prepares a response to an explosive report from short seller J Capital that alleges it has artificially inflated revenues and profits to fool investors. 

The impertinent U.S. short sellers even putting the boot into the $10 billion tech giant’s mundane industrial estate location, with this photo of a company car parked outside the wonder from Sydney’s Alexandria’s headquarters. 

I must admit that family commitments mean I’m a regular visitor to the suburb of Alexandria that must be the sausage sizzle capital of Australia given the amount of home improvement stores, industrial estates, warehouses, and giant indoor play centres it contains. 

Alexandria is not Silicon Valley, but in fairness the freight logistics company’s location is likely related to its proximity to Port Botany and Sydney Airport not too far down the road. 

Looking ahead, WiseTech’s grudge match with its U.S. short seller could rival Afterpay Vs the RBA for box office pulling power. 

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Tom Richardson owns shares of AFTERPAY T FPO and WiseTech Global.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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