- ASIC released their latest report about the rapidly growing and somewhat contentious Buy Now Pay Later sector yesterday
- The report highlights that Buy Now Pay Later services don’t seem to work well for some consumers
- Like all credit products, Buy Now Pay Later services need to be used with caution and discipline
If you are one of the estimated 6.1 million Australians using Buy Now Pay Later (BNPL) arrangements its worth having a quick look at the key findings from ASIC’s latest report into the sector.
Unfortunately, the report is well out of date because it relies on data that is almost 18 months old and predates the COVID-19 pandemic. However, it highlights some of the problems that some people have with BNPL services, including these sobering statistics:
- 21% of BNPL users who were surveyed had missed a payment in the last 12 months – which means they probably paid fees they weren’t expecting to pay. From June 2016 to June 2019 between 9% and 15% of BNPL transactions incurred missed payment fees!
- 20% of surveyed BNPL users said they had cut back on essentials, such as meals, to make their BNPL payments on time, during the last 12 months
- 15% of surveyed BNPL users said they had taken out an additional loan to meet their BNPL repayments
The obvious question for ASIC is how long they let BNPL services continue with none of the safeguards such as responsible lending obligations that protect users of other credit products such as credit cards.
Ironically, rather than impose responsible lending obligations on BNPL services, the government is proposing to remove them from other credit products.
So, like all credit products, BNPL services need to use them with caution and discipline. If you can’t afford to buy what you are after, you probably cant afford to use a BNPL service to get it either, especially if you are going to incur missed payment fees.
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