On Wednesday, the Australian government introduced legislation to regulate buy-now-pay-later (BNPL) firms, requiring them to run credit checks on borrowers. The purpose of this change is to bring the industry on par with other consumer credit products, as it is quite popular among young people. People who are struggling financially typically turn to BNPL firms for short-term loans that don’t require any sort of credit check and don’t have any interest.
As a result of the new regulations, BNPL providers are now subject to regulation by the Australian Securities and Investments Commission, which requires them to hold an Australian credit licence. Financial Services Minister Stephen Jones stressed the need to treat products that operate similarly to credit as such for regulatory purposes. Due to the reduced risk and expense of BNPL in comparison to other types of credit, the Act establishes a “low-cost credit” category.
During the COVID-19 epidemic, the BNPL sector grew substantially as a result of stimulus payments and more internet buying. Nevertheless, in the face of ongoing inflation, worries over the capacity to repay have escalated. Fintech research indicates that the majority of BNPL service customers are members of Generation Z, the age bracket spanning from 18 to 25.
This country is home to approximately twelve listed BNPL providers.
