The Afterpay Touch Group (ASX: APT) share price was hit hard in the last quarter of 2018 due to both the volatility in global markets and the announcement of a Senate inquiry that would target buy-now pay-later platforms.

The company’s share price has dropped 56% since reaching an all-time high in August. However, it remains 90% higher when compared to this time last year.

So what does the share market have in store for Afterpay in 2019?

Rapid Rise

The buy-now-pay-later concept has caught on rapidly in Australia and is quickly gaining traction after its launch in the US market. An announcement released by Afterpay in November states that within six months of launching in the US over 300,000 transactions have been made.

Afterpay also announced that an additional 1,300 retailers, on top of the 900 already in the US, are in the process of integrating onto the platform or have signed agreements to use the platform in the future.

While these US numbers speak for themselves, domestically consumer growth is also strong.

In Australia and New Zealand, Afterpay’s customer base has grown to over 2.5 million (75% of those being from the millennial generation) and repeat transaction activity is accounting for over 90% of monthly underlying sales.

The latter figure demonstrates the current positive attitude Australian consumers have towards Afterpay. Afterpay has done exceptionally well in capturing the attention of the younger generation who, as Nick Molnar CEO of Afterpay says, are averse to credit after growing up in the Global Financial Crisis.

Impending Inquiry

In November 2018 the Australian Securities & Investments Committee (ASIC) recommended that Afterpay and other sector participants become regulated through the product intervention powers.

The regulation would give ASIC the power to intervene in the market when and if it believed there was significant consumer detriment caused by the use of the product.

The release of this statement was seen as good news for the company as ASIC recommended no further legislative terms for the buy-now-pay-later sector.

As Afterpay does not charge any interest to the customer and also limits late fees, it is not classified as a credit product under the National Credit Code. This makes it quite easy for the consumer to use Afterpay as they do not perform credit checks.

Any legislation that forced Afterpay to perform credit checks on the consumer would slow the growth of new customers using the platform. Afterpay would have to cover any expense incurred when performing the credit checks.

Is Afterpay a Buy?

If you are searching for a company with high growth prospects, and are willing to ride out any short-term volatility, Afterpay may be for you.

Judging by its early success in the US, Afterpay has plenty of growth ahead in the international market. I will be looking to add this company to my portfolio in the near future.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

This article was contributed by Jack Magann. At the time of publishing, Jack does not own shares of Afterpay.