Australian buy now pay later (BNPL) firm Afterpay believes that local merchants can slash payment costs by utilizing cryptocurrencies.

In a submission to the Senate inquiry into “Australia as a Technology and Financial Center,” Afterpay stated that the use of blockchain-based transactions could cut the fees associated with traditional payment methods, including card issuer, network operator and banking fees:

“Merchants stand to benefit considerably from the cryptocurrency model, as card network fees are entirely removed from the equation and the customer/payer bears the transaction costs.”

Under the crypto model, the customer would front the cost of validating the payment on the blockchain. This could either be relatively cheap or costly depending on what cryptocurrency and blockchain the transaction is conducted with or how congested a network is at any given time.

If such a scenario were to play out, Afterpay stated that transaction fees would be transparent, and customers would be granted the choice to “wait for more favorable network conditions and a lower cost” before making transactions.

The inquiry is investigating a broad range of factors related to financial technology, such as the economic and employment opportunities posed by crypto and blockchain tech, barriers to the uptake of new technologies, and the impact of corporate law “restraining new investment” in Australia. Afterpay will be speaking before the Senate committee later on Wednesday.

While BNPL competitor Zip has outlined plans to offer crypto trading services for its Australian and United States-based customers, Afterpay is yet to reveal any plans to work with digital assets. However, crypto-friendly payments firm Square acquired Afterpay in a $29-billion stock deal announced on Aug. 1, which could see the firm enter the space in the future.

In its submission to the Senate, Afterpay noted that it “does not currently offer crypto-related products” but is actively “considering” how innovative fintech features could function as a part of the alternative financial platform.

Related: Australia, Singapore, Malaysia,and South Africa launch joint CBDC pilot

Stablecoins down under

On the topic of stablecoins, Afterpay emphasized that the Australian government should work with the crypto sector to consider what “framework an optimal environment for an AUD-backed stablecoin should look like.”

According to Afterpay, the objective should be to provide stablecoin users with protections concerning the asset but regulate it in a way that doesn’t stifle fintech innovation in Australia.

“This includes considering if regulatory instruments are required for stablecoin issuers to have transparent and adequate prudential reserve holdings, consumer-focused data protections and fair and appealable processes in place regarding account blacklisting,” it said.

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