Australia is regulating buy-now-pay-later sector with credit checks for borrowers

From Investing.com: 2024-06-04 23:25:39

The Australian government is introducing new legislation to regulate the buy-now-pay-later (BNPL) sector, requiring credit checks for borrowers. BNPL firms offer interest-free short-term loans with minimal checks, popular among cash-strapped youth. The proposed laws will make BNPL providers hold an Australian credit licence and fall under the corporate regulator’s scrutiny.

Minister for Financial Services Stephen Jones stated that if BNPL looks and acts like credit, it should be regulated as such. The legislation would create a new category of “low-cost credit” to reflect the lower risk and cost compared to other forms of credit. Concerns about repayments have been rising in Australia amid sticky inflation.

Gen Z consumers, aged 18-25, make up the majority of BNPL users, with 7 million active accounts averaging A$136 per transaction. Zip Co’s Peter Gray welcomed the government’s move, aligning with their existing practices. Afterpay, owned by Jack Dorsey’s Block Inc, did not respond immediately to requests for comment.



Read more at Investing.com: Australia moves to rein in buy-now-pay-later with credit check law By Reuters