With Australians fighting the cost-of-living financial squeeze created by the Reserve Bank, One Click Group (ASX: 1CG) has seen a surge in customer demand for their Next Day Refund product within the first 2 days of FY24 ending, enticed by the swift turnaround on tax refunds.
The Next Day Refund product, which debuted last financial year, allows approved customers to receive an advance cash payment of up to $1,000 the day after lodging their tax return. This service, priced at $207 per tax lodgement, is significantly higher than the standard $99 fee but offers convenience for those eager to access their withheld funds promptly. To qualify, customers must have a clean tax lodgement history and meet several other criteria to minimise One Click Group’s default risk.
“We are pleased to be able to again offer new and existing customers convenient and efficient access to their tax refund via our Next Day Refund product,” said Mark Waller, Managing Director of One Click Group.
“This product provides a valuable point of difference, allowing our customers to receive their refund quicker by lodging their tax return with One Click Life.”
Following the commercial success of Next Day Refund last year, One Click Group secured a $4.4 million short-term loan note facility to support the growing demand for Next Day Refund. The facility, issued by the Company’s wholly owned subsidiary Mobile Business Devices Pty Ltd (MBD), provides the financial backing necessary to advance funds to customers. With a 3% establishment fee and a 12% annual coupon rate on the outstanding amount, the facility ensures that the additional revenue premium charged for the product more than covers financing costs.
Typically, the Australian Taxation Office (ATO) refunds the tax return into One Click’s Trust Account approximately two weeks after lodgement, meaning the $1,000 advance is only funded for a minimal period.
To date, MBD has issued 4.4 million loan notes under the facility, which are repayable in 60 days with an option to extend for an additional 30 days at MBD’s discretion. Depending on demand, the company may increase the amount raised under the facility to an aggregate of $5 million by 30 September 2024. One Click Group’s directors and related parties have also shown their confidence in the product by contributing $815,000 to the facility under the same terms as non-related party investors.
“With the Facility now in effect, the Company is well placed to deliver strong results for the tax season where we expect strong growth on the last Financial Year and we look forward to providing investors with regular market updates in the coming months,” said Waller.
Highlighting the desperation of Australians in need of cash due to high interest rates that have put households under serious financial pressure, the latest minutes from the Reserve Bank of Australia paint a bleak picture for mortgage payers.
The RBA noted that households are “financially squeezed”, the first time they have used the term, to suggest that wage earners are struggling to make mortgage repayments. What was previously classified as disposable income is now being applied to repayments at record highs, draining families of savings and prompting more help from charities to feed their families.
Those same RBA minutes cited no plans to reduce the current 4.35% cash rate which has been increasing or unchanged since April 2022, despite former RBA Chair Phillip Lowe declaring in 2021 that interest rates will not rise until 2024.
Lowe ultimately issued an apology to all homeowners that took out mortgages under his watch of the RBA, with no repercussions from his comments while affected families are turning to food stamps.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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