The government has commenced a consultation process for regulating ‘Buy Now, Pay Later’ (BNPL) products.
Active BNPL accounts grew from five million to seven million during the last financial year. Most of them belong to consumers between the ages of 18 and 34.
The products deliver tangible benefits to many of these consumers, but there is a regulatory gap that can leave some vulnerable groups in over their heads, the government said.
There are three options to close the regulation gap:
- Option one: implement stronger industry self-regulation and a new ‘affordability test’ requirement;
- Option two: partly bring BNPL into the Credit Act; or
- Option three: completely bring BNPL into the Credit Act in line with credit cards and other traditional credit products.