The Bank for International Settlements has warned that rapid global growth in buy now,pay later (BNPL) services could create risks in the financial system.
Consumer advocates say Afterpay’s new subscription product could lure Australians into more debt,but the company says it offers a safer alternative to credit cards.
The government will regulate Afterpay and its rivals as credit,closing a gaping loophole – but there’s a twist.
A legal change will bring buy now,pay later providers closer in line with credit providers,including requirements to comply with industry minimum standards.
Soaring numbers of people are resorting to buy now,pay later services for food,bills and fuel as experts warn of a troubling trend in Australians having their entire wages deducted to pay back spiralling debts.
Buy now,pay later (BNPL) companies say they will consider improving access to hardship support schemes and be clearer about how they can assist vulnerable consumers.
Fintechs may be falling out of fashion,but Afterpay’s owner says it has “unique” advantages when it comes to taking on banks.
The company,which burned through $18 million of cash in the latest quarter,is the latest buy now,pay later player to feel the crunch.
Those who use buy now,pay later apps are much more likely to also use advance-pay apps,making them more susceptible to falling into financial difficulties.
Afterpay has opened the door to conducting credit checks on some customers as it prepares for regulation of buy now pay later products.
Zip Co co-founder Peter Gray has talked up the fintech’s resilience,even as the market worries about how quickly the embattled fintech is burning through cash.