Save
ASIC puts buy now, pay later schemes under scrutiny
ASIC has put the buy now, pay later industry in its sights, as users overcommit to expensive purchases.
ASIC puts buy now, pay later schemes under scrutiny
ASIC has put the buy now, pay later industry in its sights, as users overcommit to expensive purchases.
ASIC’s first review into the thriving “buy now, pay later” industry has been released today, with one in six users found to have been forced to let accounts become overdrawn, delay bill payments or borrow additional money because of the arrangement.
ASIC commissioner Danielle Press said this figure was particularly concerning given that the majority of consumers using buy now, pay later arrangements were young, and that some providers were found to use persuasive techniques that could influence buyer behaviour.
“Although our review found many consumers enjoy using buy now, pay later arrangements and plan to continue using them, there are some potential risks for consumers in using these products,” she said.
“The typical buy now, pay later consumer is young with 60 per cent of buy now, pay later users aged between 18 to 34 years old. We found that buy now, pay later arrangements can cause some consumers to become financially overcommitted and liable to paying late fees.”
“The exponential growth in this industry, along with the risks we have identified, means this will remain an area of ongoing focus for ASIC. One area we will be targeting is where consumers are paying more than they need to for using a buy now, pay later arrangement.”
The review, which examined six of the industry’s key players – Afterpay, zipPay, Certegy Ezi-Pay, Oxipay, BrightePay and Openpay, – found that the number of users of buy now, pay later services increased five-fold from 2015 to 2018 to 2 million people.
Alongside this, the number of transactions rose from close to 50,000 throughout the month of April 2016 to 1.9 million by June 2018.
As of 30 June this year, users collectively account for $903 million in outstanding balances.
The findings correlate with research released by RateCity earlier this year, which found that shoppers can be hit with fees of up to $68 per item from some buy now, pay later providers.
Arrangements reviewed by ASIC ranged from fixed-term contracts of up to 56 days that offered purchases of up to $2,000 to some offering credit amounts of up to $30,000.
ASIC’s findings come as the NSW government last month announced an inquiry into such buy now, pay later arrangements, to be released in February 2019.
That inquiry is expected to look at “whether current regulation of these service providers meets community standards and expectations and whether reform is needed to address harm being caused to consumers.”
ASIC has offered its support for the strengthening of such regulation through allowing the commission to extend its proposed product intervention powers to all credit facilities regulated under the ASIC Act.
“Product intervention powers will provide ASIC with a flexible tool kit to address emerging products and services, such as buy now, pay later arrangements,” the review stated.
“This will ensure ASIC can take appropriate action where significant consumer detriment is identified.”
RELATED ARTICLES
Expenses
Expert tips to secure your financial safety net
New Zealanders are known for their "she'll be right" attitude, but when it comes to handling unexpected bills, being prepared is crucial. Read more
Expenses
Australians continue to opt for free VPNs, ignoring potential privacy risks
Australians, alongside citizens of Sweden, South Korea, and Mexico, are increasingly choosing to use free Virtual Private Networks (VPNs), despite the potential threats to their privacy. Read more
Expenses
Rooftop solar in childcare centres could cut energy bills by millions
The analysis conducted by Parents for Climate has revealed that the installation of rooftop solar and batteries in early childhood education and care (ECEC) centres could lead to savings of up to $130 ...Read more
Expenses
Corporate Traveller identifies key strategies for business travel savings
Flight Centre Travel Group's Corporate Traveller, a premier service provider for managing SME travel, has shared several effective strategies that enabled their business clients to significantly ...Read more
Expenses
Price no longer the prime factor for energy bills
Many Australians are intrigued but unconvinced when it comes to greening their energy bill. Read more
Expenses
1 in 2 Aussie pet owners spends on their pets more than themselves
Does owning a pet eat into your monthly budget? You’re not alone. Read more
Expenses
The real reason Sydney’s petrol prices are so high
Sydney fuel prices may seem like they’re soaring, but a recent study indicates that they may be cheaper than you think. Read more
Expenses
Morrison backs big pharma, turns back to developing countries
Big pharma is currently fighting to maintain intellectual property protections over COVID-19 vaccines, with Australia refusing to act despite having no pharmaceutical companies. Read more
Expenses
Expert tips to secure your financial safety net
New Zealanders are known for their "she'll be right" attitude, but when it comes to handling unexpected bills, being prepared is crucial. Read more
Expenses
Australians continue to opt for free VPNs, ignoring potential privacy risks
Australians, alongside citizens of Sweden, South Korea, and Mexico, are increasingly choosing to use free Virtual Private Networks (VPNs), despite the potential threats to their privacy. Read more
Expenses
Rooftop solar in childcare centres could cut energy bills by millions
The analysis conducted by Parents for Climate has revealed that the installation of rooftop solar and batteries in early childhood education and care (ECEC) centres could lead to savings of up to $130 ...Read more
Expenses
Corporate Traveller identifies key strategies for business travel savings
Flight Centre Travel Group's Corporate Traveller, a premier service provider for managing SME travel, has shared several effective strategies that enabled their business clients to significantly ...Read more
Expenses
Price no longer the prime factor for energy bills
Many Australians are intrigued but unconvinced when it comes to greening their energy bill. Read more
Expenses
1 in 2 Aussie pet owners spends on their pets more than themselves
Does owning a pet eat into your monthly budget? You’re not alone. Read more
Expenses
The real reason Sydney’s petrol prices are so high
Sydney fuel prices may seem like they’re soaring, but a recent study indicates that they may be cheaper than you think. Read more
Expenses
Morrison backs big pharma, turns back to developing countries
Big pharma is currently fighting to maintain intellectual property protections over COVID-19 vaccines, with Australia refusing to act despite having no pharmaceutical companies. Read more
More articles
OUR PLATFORMS AND BRANDS
- Accountants Daily
- Accounting Times
- Adviser Innovation
- Australian Aviation
- Broker Daily
- Cyber Daily
- Defence Connect
- Fintech Business
- HR Leader
- Independent Financial Adviser
- Investment Centre
- Investor Daily
- Lawyers Weekly
- Money Management
- Nestegg
- Property Buzz
- Real Estate Business
- Smart Property Investment
- SMSF Adviser
- Space Connect
- Super Review
- The Adviser
- Wellness Daily
- World of Aviation
EVENTS AND SUMMITS
- Accountants Daily 30 Under 30 Awards
- Adviser Innovation Summit
- Australian Accounting Awards
- Australian Aviation Awards
- Australian Broking Awards
- Australian Defence Industry Awards
- Australian Law Awards
- Australian Space Awards
- Australian Space Summit
- Better Business Summit & Awards
- Broker Daily Business Awards
- Corporate Counsel Summit & Awards
- Cyber Security Summit & Awards
- Defence Connect Budget Lunch
- Defence Connect DSR Summit
- Fund Manager of the Year Awards
- ifa Excellence Awards
- ifa Future Forum
- Investor Daily ESG Summit
- Lawyers Weekly 30 Under 30 Awards
- Lawyers Weekly Women in Law Forum
- New Broker Academy
- Partner of the Year Awards
- REB Awards
- Reinnovate
- SME Broker Bootcamp
- SMSF Adviser Technical Day
- Super Fund of the Year Awards
- Women in Finance Awards
- Women in Law Awards
- Accountants Daily Podcast Network
- Australian Aviation Podcast Network
- Broker Daily Podcast Network
- Defence Connect Podcast Network
- HR Leader Podcast Network
- REB Podcast Network
- Relative Return
- Space Connect Podcast
- The Adviser Podcast Network
- The ifa Show
- The Lawyers Weekly Show
- The Smart Property Investment Show
PODCASTS
LEARNING AND EDUCATION
MOMENTUM MARKETS NETWORK
LINKS
STAY CONNECTED
Make your nest egg grow. Register now for nestegg updates.