'Buy Now, Pay Later' (BNPL) schemes have gained significant popularity in recent years, allowing consumers to make purchases without immediate payment.

BNPL schemes function by enabling consumers to buy items and subsequently pay for them through instalments over time, often without interest or fees. However, it is important to note that this convenience comes at a price.

While BNPL schemes offer convenience, consumer advocacy groups have raised concerns about their potential drawbacks. These include the risk of accumulating excessive debt, challenges in managing repayments, and a lack of transparency regarding terms and conditions.

With many people already struggling to make ends meet, these schemes could be putting vulnerable consumers further at risk.

To address these concerns, the Australian government has implemented stricter regulations for these services. BNPL schemes will now be classified as credit products, subjecting them to the corresponding regulations and oversight.

Australia's Buy Now Pay Later (BNPL) system is set to be regulated by the federal government due to concerns of potential danger to consumers. Credit: Unsplash/Cardmapr.

Following a consultation process, Financial Services Minister Stephen Jones announced that BNPL service providers would need to hold a credit licence, implement hardship provisions, and maintain minimum standards of conduct. This is aimed at better protecting consumers using these increasingly popular payment alternatives.

The government's decision emerged following the release of a Treasury paper in November last year, which examined potential regulatory approaches for BNPL services. The paper presented three options for consideration:

1. Allowing services to remain primarily self-regulated.
2. Subjecting services to limited regulation under the Credit Act.
3. Applying the same regulatory framework as credit card providers.

After careful deliberation, the government opted for the second option. Consequently, BNPL services must now conform to the revised Responsible Lending Obligations outlined in the Credit Act, in addition to complying with an enhanced Industry Code.

The popularity of BNPL experienced a remarkable surge during the 2021-22 financial year, witnessing an impressive seven million active accounts and transactions totalling over $16 billion. This staggering figure represents a substantial 37 per cent increase compared to the previous year.

Minister Jones emphasised the necessity for stricter regulations by highlighting that BNPL services resemble credit in their nature and behaviour, thereby carrying the associated risks that credit entails.

'BNPL looks like credit, it acts like credit, it carries the risks of credit,' Mr Jones said.

Treasurer Jim Chalmers echoed Minister Jones' sentiments, acknowledging the significant role of BNPL in the economy while expressing concerns about the lack of effective checks and balances.

In an interview with ABC News, Chalmers stated, 'They've got a role to play, but we need to make sure that we manage the risks.'

The decision to regulate BNPL as a credit product primarily aims to address marketing risks and safeguard individuals who are most vulnerable to its adverse consequences. This includes women, First Nations communities, and those with lower incomes.

One area of concern that requires attention is the potential issue of individuals simultaneously managing multiple BNPL accounts.

This move is aimed at managing risks associated with BNPL services. Credit: Unsplash/simonkadula.

Despite the implementation of tighter regulations, the government does not intend to eliminate these services completely.

Treasurer Chalmers clarified this stance by stating, 'We want people who can afford to participate in Buy Now, Pay Later to be able to access it, but there needs to be the right rules and regulations around it.'

The recent regulatory changes have been met with a positive response from key industry players such as Afterpay and Zip.

Afterpay, in a statement, expressed its support for the new regulations, considering them a 'strong first step' that would bring benefits to both consumers and businesses. The company emphasised its commitment to collaborating with the government, consumer groups, and other stakeholders in order to refine the details of the regulations.

Peter Gray, the co-founder of Zip, also welcomed the regulatory measures, stating that they strike a balance between safeguarding consumers from potential harms, instilling confidence in industry stakeholders, and fostering competition and innovation.

Key Takeaways

• The Australian government has implemented stricter regulations for Buy Now, Pay Later (BNPL) services, treating them as credit products.
• This move comes in response to concerns about the risks posed by BNPL, such as high levels of debt and difficulty in managing repayments.
• While aiming to protect vulnerable consumers, the government also acknowledges the importance of allowing access to BNPL for those who can afford it, emphasising the need for balanced rules and regulations.

Earlier this year, a survey shed light on a concerning trend among BNPL users, revealing that a significant portion of them are struggling to meet their repayment obligations. As a result, these individuals are experiencing a surge in debt and increased financial stress.

Jessica, a single parent, found herself compelled to turn to the popular BNPL provider Zip in order to cope with the rising cost of living during the holiday season. Explaining her situation, Jessica shared that while some of her purchases were impulsive, they stemmed from a prolonged period of deprivation.

She admitted to succumbing to the allure of being able to finally afford certain things, even if it meant taking some risks. 'I played with the devil a bit,' she said.

Jessica's story resonates with many Australians who find themselves grappling with the ongoing cost-of-living crisis, indicating that the challenges faced by BNPL users are reflective of broader economic struggles within the country.

Unfortunately, it appears that these difficulties are not going anywhere anytime soon.

BNPL services will be required to meet modified responsible-lending obligations, which the government said would be scalable to the risk level of the product. Credit: Unsplash/Jonasleupe.

If you're currently—or considering—using Buy Now, Pay Later services, it's absolutely crucial to stay informed about the recent regulatory changes and be mindful of the potential risks involved.

Just like a credit card, the BNPL system can easily become overwhelming if you're not careful with your spending habits. It's important to exercise financial wisdom and make informed decisions to avoid any unforeseen challenges down the road.

Now, we're curious to hear your thoughts on this. What do you think of these regulatory changes? Do you happen to own a credit card, and if so, do you use it regularly?

Do you believe that treating BNPL as credit services will ultimately assist more people, or do you think it could potentially encourage excessive spending? Don't hesitate to share your insights and join the conversation in the comments section below!

 

[Jest]

'Buy Now, Pay Later' (BNPL) schemes have gained significant popularity in recent years, allowing consumers to make purchases without immediate payment.

BNPL schemes function by enabling consumers to buy items and subsequently pay for them through instalments over time, often without interest or fees. However, it is important to note that this convenience comes at a price.

While BNPL schemes offer convenience, consumer advocacy groups have raised concerns about their potential drawbacks. These include the risk of accumulating excessive debt, challenges in managing repayments, and a lack of transparency regarding terms and conditions.

With many people already struggling to make ends meet, these schemes could be putting vulnerable consumers further at risk.

To address these concerns, the Australian government has implemented stricter regulations for these services. BNPL schemes will now be classified as credit products, subjecting them to the corresponding regulations and oversight.

View attachment 20337

Australia's Buy Now Pay Later (BNPL) system is set to be regulated by the federal government due to concerns of potential danger to consumers. Credit: Unsplash/Cardmapr.

Following a consultation process, Financial Services Minister Stephen Jones announced that BNPL service providers would need to hold a credit licence, implement hardship provisions, and maintain minimum standards of conduct. This is aimed at better protecting consumers using these increasingly popular payment alternatives.

The government's decision emerged following the release of a Treasury paper in November last year, which examined potential regulatory approaches for BNPL services. The paper presented three options for consideration:

1. Allowing services to remain primarily self-regulated.
2. Subjecting services to limited regulation under the Credit Act.
3. Applying the same regulatory framework as credit card providers.

After careful deliberation, the government opted for the second option. Consequently, BNPL services must now conform to the revised Responsible Lending Obligations outlined in the Credit Act, in addition to complying with an enhanced Industry Code.

The popularity of BNPL experienced a remarkable surge during the 2021-22 financial year, witnessing an impressive seven million active accounts and transactions totalling over $16 billion. This staggering figure represents a substantial 37 per cent increase compared to the previous year.

Minister Jones emphasised the necessity for stricter regulations by highlighting that BNPL services resemble credit in their nature and behaviour, thereby carrying the associated risks that credit entails.

'BNPL looks like credit, it acts like credit, it carries the risks of credit,' Mr Jones said.

Treasurer Jim Chalmers echoed Minister Jones' sentiments, acknowledging the significant role of BNPL in the economy while expressing concerns about the lack of effective checks and balances.

In an interview with ABC News, Chalmers stated, 'They've got a role to play, but we need to make sure that we manage the risks.'

The decision to regulate BNPL as a credit product primarily aims to address marketing risks and safeguard individuals who are most vulnerable to its adverse consequences. This includes women, First Nations communities, and those with lower incomes.

One area of concern that requires attention is the potential issue of individuals simultaneously managing multiple BNPL accounts.

View attachment 20338

This move is aimed at managing risks associated with BNPL services. Credit: Unsplash/simonkadula.

Despite the implementation of tighter regulations, the government does not intend to eliminate these services completely.

Treasurer Chalmers clarified this stance by stating, 'We want people who can afford to participate in Buy Now, Pay Later to be able to access it, but there needs to be the right rules and regulations around it.'

The recent regulatory changes have been met with a positive response from key industry players such as Afterpay and Zip.

Afterpay, in a statement, expressed its support for the new regulations, considering them a 'strong first step' that would bring benefits to both consumers and businesses. The company emphasised its commitment to collaborating with the government, consumer groups, and other stakeholders in order to refine the details of the regulations.

Peter Gray, the co-founder of Zip, also welcomed the regulatory measures, stating that they strike a balance between safeguarding consumers from potential harms, instilling confidence in industry stakeholders, and fostering competition and innovation.

Key Takeaways

• The Australian government has implemented stricter regulations for Buy Now, Pay Later (BNPL) services, treating them as credit products.
• This move comes in response to concerns about the risks posed by BNPL, such as high levels of debt and difficulty in managing repayments.
• While aiming to protect vulnerable consumers, the government also acknowledges the importance of allowing access to BNPL for those who can afford it, emphasising the need for balanced rules and regulations.

Earlier this year, a survey shed light on a concerning trend among BNPL users, revealing that a significant portion of them are struggling to meet their repayment obligations. As a result, these individuals are experiencing a surge in debt and increased financial stress.

Jessica, a single parent, found herself compelled to turn to the popular BNPL provider Zip in order to cope with the rising cost of living during the holiday season. Explaining her situation, Jessica shared that while some of her purchases were impulsive, they stemmed from a prolonged period of deprivation.

She admitted to succumbing to the allure of being able to finally afford certain things, even if it meant taking some risks. 'I played with the devil a bit,' she said.

Jessica's story resonates with many Australians who find themselves grappling with the ongoing cost-of-living crisis, indicating that the challenges faced by BNPL users are reflective of broader economic struggles within the country.

Unfortunately, it appears that these difficulties are not going anywhere anytime soon.

View attachment 20339

BNPL services will be required to meet modified responsible-lending obligations, which the government said would be scalable to the risk level of the product. Credit: Unsplash/Jonasleupe.

If you're currently—or considering—using Buy Now, Pay Later services, it's absolutely crucial to stay informed about the recent regulatory changes and be mindful of the potential risks involved.

Just like a credit card, the BNPL system can easily become overwhelming if you're not careful with your spending habits. It's important to exercise financial wisdom and make informed decisions to avoid any unforeseen challenges down the road.

Now, we're curious to hear your thoughts on this. What do you think of these regulatory changes? Do you happen to own a credit card, and if so, do you use it regularly?

Do you believe that treating BNPL as credit services will ultimately assist more people, or do you think it could potentially encourage excessive spending? Don't hesitate to share your insights and join the conversation in the comments section below!

i have never used it. if i can't pay i do not buy.

 

[Freeman27]

I often avail myself of the payPal service of four payments but I never purchase anything through them unless I have the full amount already available. I have found it very helpfu lfor larger purchases.

 

[68autobug]

I often avail myself of the payPal service of four payments but I never purchase anything through them unless I have the full amount already available. I have found it very helpfu lfor larger purcYes

 

[68autobug]

I often avail myself of the payPal service of four payments but I never purchase anything through them unless I have the full amount already available. I have found it very helpfu lfor larger purchases.

i have never used it. if i can't pay i do not buy.

I do use the 4 payment system with no charges like Paypal or Afterpay and they do send You reminders 4 days before the money is needed. You can also go into their website and pay at any other time before the due date. If You miss a payment the charges are High but if You pay on or before the due date it costs You nothing. So they only make money from Defaulters . Great for Purchases You cannot pay for in One Hit. My Wife Hates the 4 payment system , as She prefers to pay for items at the time, or just wait until She has the money to pay in Full. If I had to do this I would possibly never have a lot of things I have bought !! Plus I have never ever defaulted so I have never ever paid for paying in 4 equal payments. So paying for a good pair of Joggers at $152-00 is much easier when paying in 4 equal payments.
Lee 68autobug

 

[Ian Crane-Luff]

'Buy Now, Pay Later' (BNPL) schemes have gained significant popularity in recent years, allowing consumers to make purchases without immediate payment.

BNPL schemes function by enabling consumers to buy items and subsequently pay for them through instalments over time, often without interest or fees. However, it is important to note that this convenience comes at a price.

While BNPL schemes offer convenience, consumer advocacy groups have raised concerns about their potential drawbacks. These include the risk of accumulating excessive debt, challenges in managing repayments, and a lack of transparency regarding terms and conditions.

With many people already struggling to make ends meet, these schemes could be putting vulnerable consumers further at risk.

To address these concerns, the Australian government has implemented stricter regulations for these services. BNPL schemes will now be classified as credit products, subjecting them to the corresponding regulations and oversight.

View attachment 20337

Australia's Buy Now Pay Later (BNPL) system is set to be regulated by the federal government due to concerns of potential danger to consumers. Credit: Unsplash/Cardmapr.

Following a consultation process, Financial Services Minister Stephen Jones announced that BNPL service providers would need to hold a credit licence, implement hardship provisions, and maintain minimum standards of conduct. This is aimed at better protecting consumers using these increasingly popular payment alternatives.

The government's decision emerged following the release of a Treasury paper in November last year, which examined potential regulatory approaches for BNPL services. The paper presented three options for consideration:

1. Allowing services to remain primarily self-regulated.
2. Subjecting services to limited regulation under the Credit Act.
3. Applying the same regulatory framework as credit card providers.

After careful deliberation, the government opted for the second option. Consequently, BNPL services must now conform to the revised Responsible Lending Obligations outlined in the Credit Act, in addition to complying with an enhanced Industry Code.

The popularity of BNPL experienced a remarkable surge during the 2021-22 financial year, witnessing an impressive seven million active accounts and transactions totalling over $16 billion. This staggering figure represents a substantial 37 per cent increase compared to the previous year.

Minister Jones emphasised the necessity for stricter regulations by highlighting that BNPL services resemble credit in their nature and behaviour, thereby carrying the associated risks that credit entails.

'BNPL looks like credit, it acts like credit, it carries the risks of credit,' Mr Jones said.

Treasurer Jim Chalmers echoed Minister Jones' sentiments, acknowledging the significant role of BNPL in the economy while expressing concerns about the lack of effective checks and balances.

In an interview with ABC News, Chalmers stated, 'They've got a role to play, but we need to make sure that we manage the risks.'

The decision to regulate BNPL as a credit product primarily aims to address marketing risks and safeguard individuals who are most vulnerable to its adverse consequences. This includes women, First Nations communities, and those with lower incomes.

One area of concern that requires attention is the potential issue of individuals simultaneously managing multiple BNPL accounts.

View attachment 20338

This move is aimed at managing risks associated with BNPL services. Credit: Unsplash/simonkadula.

Despite the implementation of tighter regulations, the government does not intend to eliminate these services completely.

Treasurer Chalmers clarified this stance by stating, 'We want people who can afford to participate in Buy Now, Pay Later to be able to access it, but there needs to be the right rules and regulations around it.'

The recent regulatory changes have been met with a positive response from key industry players such as Afterpay and Zip.

Afterpay, in a statement, expressed its support for the new regulations, considering them a 'strong first step' that would bring benefits to both consumers and businesses. The company emphasised its commitment to collaborating with the government, consumer groups, and other stakeholders in order to refine the details of the regulations.

Peter Gray, the co-founder of Zip, also welcomed the regulatory measures, stating that they strike a balance between safeguarding consumers from potential harms, instilling confidence in industry stakeholders, and fostering competition and innovation.

Key Takeaways

• The Australian government has implemented stricter regulations for Buy Now, Pay Later (BNPL) services, treating them as credit products.
• This move comes in response to concerns about the risks posed by BNPL, such as high levels of debt and difficulty in managing repayments.
• While aiming to protect vulnerable consumers, the government also acknowledges the importance of allowing access to BNPL for those who can afford it, emphasising the need for balanced rules and regulations.

Earlier this year, a survey shed light on a concerning trend among BNPL users, revealing that a significant portion of them are struggling to meet their repayment obligations. As a result, these individuals are experiencing a surge in debt and increased financial stress.

Jessica, a single parent, found herself compelled to turn to the popular BNPL provider Zip in order to cope with the rising cost of living during the holiday season. Explaining her situation, Jessica shared that while some of her purchases were impulsive, they stemmed from a prolonged period of deprivation.

She admitted to succumbing to the allure of being able to finally afford certain things, even if it meant taking some risks. 'I played with the devil a bit,' she said.

Jessica's story resonates with many Australians who find themselves grappling with the ongoing cost-of-living crisis, indicating that the challenges faced by BNPL users are reflective of broader economic struggles within the country.

Unfortunately, it appears that these difficulties are not going anywhere anytime soon.

View attachment 20339

BNPL services will be required to meet modified responsible-lending obligations, which the government said would be scalable to the risk level of the product. Credit: Unsplash/Jonasleupe.

If you're currently—or considering—using Buy Now, Pay Later services, it's absolutely crucial to stay informed about the recent regulatory changes and be mindful of the potential risks involved.

Just like a credit card, the BNPL system can easily become overwhelming if you're not careful with your spending habits. It's important to exercise financial wisdom and make informed decisions to avoid any unforeseen challenges down the road.

Now, we're curious to hear your thoughts on this. What do you think of these regulatory changes? Do you happen to own a credit card, and if so, do you use it regularly?

Do you believe that treating BNPL as credit services will ultimately assist more people, or do you think it could potentially encourage excessive spending? Don't hesitate to share your insights and join the conversation in the comments section below!

I use the service regularly, as a pensioner it allows me to purchase items when discounted, I have a top rating with Afterpay, I only allow myself a certain amount at any time, the highest being $1.000 which is comfortably managed, it is, of course, better than a credit card as no interest is charged and as I have always paid on time, no penalties for the late payments problem has been accrued

 

[DrivingGirl]

I use Afterpay a Pay in 4 all the time - it evens out costs that come in peaks and troughs and makes me feel more in control- having said that I always buy things I really need and that I know I can afford, one of the benefits of a fixed income.
I have never defaulted or been late as I regard this as a privilege not a right and it can be taken away at the drop of a hat. I have earned that privilege by being responsible and diligent.
I hope they don’t remove it from me because a whole bunch of other people have been irresponsible and stupid!!

 

[Suzanne rose]

I use after pay often or paypal in 4 but I limit myself on what I know I can pay back with ease.
With interest free it is a great way to buy the larger items

I feel it needs to be more stricter as I can see how people can go over their heads.

 

[Ricki]

'Buy Now, Pay Later' (BNPL) schemes have gained significant popularity in recent years, allowing consumers to make purchases without immediate payment.

BNPL schemes function by enabling consumers to buy items and subsequently pay for them through instalments over time, often without interest or fees. However, it is important to note that this convenience comes at a price.

While BNPL schemes offer convenience, consumer advocacy groups have raised concerns about their potential drawbacks. These include the risk of accumulating excessive debt, challenges in managing repayments, and a lack of transparency regarding terms and conditions.

With many people already struggling to make ends meet, these schemes could be putting vulnerable consumers further at risk.

To address these concerns, the Australian government has implemented stricter regulations for these services. BNPL schemes will now be classified as credit products, subjecting them to the corresponding regulations and oversight.

View attachment 20337

Australia's Buy Now Pay Later (BNPL) system is set to be regulated by the federal government due to concerns of potential danger to consumers. Credit: Unsplash/Cardmapr.

Following a consultation process, Financial Services Minister Stephen Jones announced that BNPL service providers would need to hold a credit licence, implement hardship provisions, and maintain minimum standards of conduct. This is aimed at better protecting consumers using these increasingly popular payment alternatives.

The government's decision emerged following the release of a Treasury paper in November last year, which examined potential regulatory approaches for BNPL services. The paper presented three options for consideration:

1. Allowing services to remain primarily self-regulated.
2. Subjecting services to limited regulation under the Credit Act.
3. Applying the same regulatory framework as credit card providers.

After careful deliberation, the government opted for the second option. Consequently, BNPL services must now conform to the revised Responsible Lending Obligations outlined in the Credit Act, in addition to complying with an enhanced Industry Code.

The popularity of BNPL experienced a remarkable surge during the 2021-22 financial year, witnessing an impressive seven million active accounts and transactions totalling over $16 billion. This staggering figure represents a substantial 37 per cent increase compared to the previous year.

Minister Jones emphasised the necessity for stricter regulations by highlighting that BNPL services resemble credit in their nature and behaviour, thereby carrying the associated risks that credit entails.

'BNPL looks like credit, it acts like credit, it carries the risks of credit,' Mr Jones said.

Treasurer Jim Chalmers echoed Minister Jones' sentiments, acknowledging the significant role of BNPL in the economy while expressing concerns about the lack of effective checks and balances.

In an interview with ABC News, Chalmers stated, 'They've got a role to play, but we need to make sure that we manage the risks.'

The decision to regulate BNPL as a credit product primarily aims to address marketing risks and safeguard individuals who are most vulnerable to its adverse consequences. This includes women, First Nations communities, and those with lower incomes.

One area of concern that requires attention is the potential issue of individuals simultaneously managing multiple BNPL accounts.

View attachment 20338

This move is aimed at managing risks associated with BNPL services. Credit: Unsplash/simonkadula.

Despite the implementation of tighter regulations, the government does not intend to eliminate these services completely.

Treasurer Chalmers clarified this stance by stating, 'We want people who can afford to participate in Buy Now, Pay Later to be able to access it, but there needs to be the right rules and regulations around it.'

The recent regulatory changes have been met with a positive response from key industry players such as Afterpay and Zip.

Afterpay, in a statement, expressed its support for the new regulations, considering them a 'strong first step' that would bring benefits to both consumers and businesses. The company emphasised its commitment to collaborating with the government, consumer groups, and other stakeholders in order to refine the details of the regulations.

Peter Gray, the co-founder of Zip, also welcomed the regulatory measures, stating that they strike a balance between safeguarding consumers from potential harms, instilling confidence in industry stakeholders, and fostering competition and innovation.

Key Takeaways

• The Australian government has implemented stricter regulations for Buy Now, Pay Later (BNPL) services, treating them as credit products.
• This move comes in response to concerns about the risks posed by BNPL, such as high levels of debt and difficulty in managing repayments.
• While aiming to protect vulnerable consumers, the government also acknowledges the importance of allowing access to BNPL for those who can afford it, emphasising the need for balanced rules and regulations.

Earlier this year, a survey shed light on a concerning trend among BNPL users, revealing that a significant portion of them are struggling to meet their repayment obligations. As a result, these individuals are experiencing a surge in debt and increased financial stress.

Jessica, a single parent, found herself compelled to turn to the popular BNPL provider Zip in order to cope with the rising cost of living during the holiday season. Explaining her situation, Jessica shared that while some of her purchases were impulsive, they stemmed from a prolonged period of deprivation.

She admitted to succumbing to the allure of being able to finally afford certain things, even if it meant taking some risks. 'I played with the devil a bit,' she said.

Jessica's story resonates with many Australians who find themselves grappling with the ongoing cost-of-living crisis, indicating that the challenges faced by BNPL users are reflective of broader economic struggles within the country.

Unfortunately, it appears that these difficulties are not going anywhere anytime soon.

View attachment 20339

BNPL services will be required to meet modified responsible-lending obligations, which the government said would be scalable to the risk level of the product. Credit: Unsplash/Jonasleupe.

If you're currently—or considering—using Buy Now, Pay Later services, it's absolutely crucial to stay informed about the recent regulatory changes and be mindful of the potential risks involved.

Just like a credit card, the BNPL system can easily become overwhelming if you're not careful with your spending habits. It's important to exercise financial wisdom and make informed decisions to avoid any unforeseen challenges down the road.

Now, we're curious to hear your thoughts on this. What do you think of these regulatory changes? Do you happen to own a credit card, and if so, do you use it regularly?

Do you believe that treating BNPL as credit services will ultimately assist more people, or do you think it could potentially encourage excessive spending? Don't hesitate to share your insights and join the conversation in the comments section below!

Hubby (retired accountant) and I have a credit card and it seems we use it for every thing and carry less cash than ever before. We use Afterpay a fair bit BUT we always make sure we actually have the cash in another account just in case there's a problem . We're extremely careful but I can see how some get themselves in trouble.

 

[donandviv77]

'Buy Now, Pay Later' (BNPL) schemes have gained significant popularity in recent years, allowing consumers to make purchases without immediate payment.

BNPL schemes function by enabling consumers to buy items and subsequently pay for them through instalments over time, often without interest or fees. However, it is important to note that this convenience comes at a price.

While BNPL schemes offer convenience, consumer advocacy groups have raised concerns about their potential drawbacks. These include the risk of accumulating excessive debt, challenges in managing repayments, and a lack of transparency regarding terms and conditions.

With many people already struggling to make ends meet, these schemes could be putting vulnerable consumers further at risk.

To address these concerns, the Australian government has implemented stricter regulations for these services. BNPL schemes will now be classified as credit products, subjecting them to the corresponding regulations and oversight.

View attachment 20337

Australia's Buy Now Pay Later (BNPL) system is set to be regulated by the federal government due to concerns of potential danger to consumers. Credit: Unsplash/Cardmapr.

Following a consultation process, Financial Services Minister Stephen Jones announced that BNPL service providers would need to hold a credit licence, implement hardship provisions, and maintain minimum standards of conduct. This is aimed at better protecting consumers using these increasingly popular payment alternatives.

The government's decision emerged following the release of a Treasury paper in November last year, which examined potential regulatory approaches for BNPL services. The paper presented three options for consideration:

1. Allowing services to remain primarily self-regulated.
2. Subjecting services to limited regulation under the Credit Act.
3. Applying the same regulatory framework as credit card providers.

After careful deliberation, the government opted for the second option. Consequently, BNPL services must now conform to the revised Responsible Lending Obligations outlined in the Credit Act, in addition to complying with an enhanced Industry Code.

The popularity of BNPL experienced a remarkable surge during the 2021-22 financial year, witnessing an impressive seven million active accounts and transactions totalling over $16 billion. This staggering figure represents a substantial 37 per cent increase compared to the previous year.

Minister Jones emphasised the necessity for stricter regulations by highlighting that BNPL services resemble credit in their nature and behaviour, thereby carrying the associated risks that credit entails.

'BNPL looks like credit, it acts like credit, it carries the risks of credit,' Mr Jones said.

Treasurer Jim Chalmers echoed Minister Jones' sentiments, acknowledging the significant role of BNPL in the economy while expressing concerns about the lack of effective checks and balances.

In an interview with ABC News, Chalmers stated, 'They've got a role to play, but we need to make sure that we manage the risks.'

The decision to regulate BNPL as a credit product primarily aims to address marketing risks and safeguard individuals who are most vulnerable to its adverse consequences. This includes women, First Nations communities, and those with lower incomes.

One area of concern that requires attention is the potential issue of individuals simultaneously managing multiple BNPL accounts.

View attachment 20338

This move is aimed at managing risks associated with BNPL services. Credit: Unsplash/simonkadula.

Despite the implementation of tighter regulations, the government does not intend to eliminate these services completely.

Treasurer Chalmers clarified this stance by stating, 'We want people who can afford to participate in Buy Now, Pay Later to be able to access it, but there needs to be the right rules and regulations around it.'

The recent regulatory changes have been met with a positive response from key industry players such as Afterpay and Zip.

Afterpay, in a statement, expressed its support for the new regulations, considering them a 'strong first step' that would bring benefits to both consumers and businesses. The company emphasised its commitment to collaborating with the government, consumer groups, and other stakeholders in order to refine the details of the regulations.

Peter Gray, the co-founder of Zip, also welcomed the regulatory measures, stating that they strike a balance between safeguarding consumers from potential harms, instilling confidence in industry stakeholders, and fostering competition and innovation.

Key Takeaways

• The Australian government has implemented stricter regulations for Buy Now, Pay Later (BNPL) services, treating them as credit products.
• This move comes in response to concerns about the risks posed by BNPL, such as high levels of debt and difficulty in managing repayments.
• While aiming to protect vulnerable consumers, the government also acknowledges the importance of allowing access to BNPL for those who can afford it, emphasising the need for balanced rules and regulations.

Earlier this year, a survey shed light on a concerning trend among BNPL users, revealing that a significant portion of them are struggling to meet their repayment obligations. As a result, these individuals are experiencing a surge in debt and increased financial stress.

Jessica, a single parent, found herself compelled to turn to the popular BNPL provider Zip in order to cope with the rising cost of living during the holiday season. Explaining her situation, Jessica shared that while some of her purchases were impulsive, they stemmed from a prolonged period of deprivation.

She admitted to succumbing to the allure of being able to finally afford certain things, even if it meant taking some risks. 'I played with the devil a bit,' she said.

Jessica's story resonates with many Australians who find themselves grappling with the ongoing cost-of-living crisis, indicating that the challenges faced by BNPL users are reflective of broader economic struggles within the country.

Unfortunately, it appears that these difficulties are not going anywhere anytime soon.

View attachment 20339

BNPL services will be required to meet modified responsible-lending obligations, which the government said would be scalable to the risk level of the product. Credit: Unsplash/Jonasleupe.

If you're currently—or considering—using Buy Now, Pay Later services, it's absolutely crucial to stay informed about the recent regulatory changes and be mindful of the potential risks involved.

Just like a credit card, the BNPL system can easily become overwhelming if you're not careful with your spending habits. It's important to exercise financial wisdom and make informed decisions to avoid any unforeseen challenges down the road.

Now, we're curious to hear your thoughts on this. What do you think of these regulatory changes? Do you happen to own a credit card, and if so, do you use it regularly?

Do you believe that treating BNPL as credit services will ultimately assist more people, or do you think it could potentially encourage excessive spending? Don't hesitate to share your insights and join the conversation in the comments section below!

Wow, $16 Billion owed by consumers! Just think just how many companies and employees have been saved by this wanton disregard for being able to pay back the money owed. And whom will these spenders be on the back of the Government to accept responsibility for this disregard for financial acumen. And by the Government I mean every other Australian who have the intelligence to know that these BYPL schemes are traps for the people who want to buy the latest electronics/clothing/household goods instead of saving their money to buy when they have accumulated the funds necessary just like we had to do 20+years ago.

 

[donandviv77]

Hubby (retired accountant) and I have a credit card and it seems we use it for every thing and carry less cash than ever before. We use Afterpay a fair bit BUT we always make sure we actually have the cash in another account just in case there's a problem . We're extremely careful but I can see how some get themselves in trouble.

If your husband is an ex accountant he should ditch the credit card and get a Debit Card so that you can only buy goods using your own money.

 

[Trudi]

If your husband is an ex accountant he should ditch the credit card and get a Debit Card so that you can only buy goods using your own money.

I am also a retired accountant. I have two no-fee credit cards which are used to pay for nearly everything I purchase and both cards are paid in full each month. If any business is charging fees for credit/debit cards, I insert the card and select 'savings' to pay.

As for buy now/pay later, I never have and never will use those.

 

[SGH]

I do use the 4 payment system with no charges like Paypal or Afterpay and they do send You reminders 4 days before the money is needed. You can also go into their website and pay at any other time before the due date. If You miss a payment the charges are High but if You pay on or before the due date it costs You nothing. So they only make money from Defaulters . Great for Purchases You cannot pay for in One Hit. My Wife Hates the 4 payment system , as She prefers to pay for items at the time, or just wait until She has the money to pay in Full. If I had to do this I would possibly never have a lot of things I have bought !! Plus I have never ever defaulted so I have never ever paid for paying in 4 equal payments. So paying for a good pair of Joggers at $152-00 is much easier when paying in 4 equal payments.
Lee 68autobug

I dont believe you have to spend $152 for a good pair of joggers. You should listen to your wife and only buy things when you have the money up front.

 

[SGH]

I have a PayPal account and use it for the ease of mind, knowing when I get something online and it doesn't turn up or there is something wrong I can get my money back. Too many people fall into these credit traps and end up not knowing where their money is going or how they are going to pay for food. What was wrong with layby, you get the item after you have paid for it.

 

[donellefeltham@ gmail.com]

'Buy Now, Pay Later' (BNPL) schemes have gained significant popularity in recent years, allowing consumers to make purchases without immediate payment.

BNPL schemes function by enabling consumers to buy items and subsequently pay for them through instalments over time, often without interest or fees. However, it is important to note that this convenience comes at a price.

While BNPL schemes offer convenience, consumer advocacy groups have raised concerns about their potential drawbacks. These include the risk of accumulating excessive debt, challenges in managing repayments, and a lack of transparency regarding terms and conditions.

With many people already struggling to make ends meet, these schemes could be putting vulnerable consumers further at risk.

To address these concerns, the Australian government has implemented stricter regulations for these services. BNPL schemes will now be classified as credit products, subjecting them to the corresponding regulations and oversight.

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Australia's Buy Now Pay Later (BNPL) system is set to be regulated by the federal government due to concerns of potential danger to consumers. Credit: Unsplash/Cardmapr.

Following a consultation process, Financial Services Minister Stephen Jones announced that BNPL service providers would need to hold a credit licence, implement hardship provisions, and maintain minimum standards of conduct. This is aimed at better protecting consumers using these increasingly popular payment alternatives.

The government's decision emerged following the release of a Treasury paper in November last year, which examined potential regulatory approaches for BNPL services. The paper presented three options for consideration:

1. Allowing services to remain primarily self-regulated.
2. Subjecting services to limited regulation under the Credit Act.
3. Applying the same regulatory framework as credit card providers.

After careful deliberation, the government opted for the second option. Consequently, BNPL services must now conform to the revised Responsible Lending Obligations outlined in the Credit Act, in addition to complying with an enhanced Industry Code.

The popularity of BNPL experienced a remarkable surge during the 2021-22 financial year, witnessing an impressive seven million active accounts and transactions totalling over $16 billion. This staggering figure represents a substantial 37 per cent increase compared to the previous year.

Minister Jones emphasised the necessity for stricter regulations by highlighting that BNPL services resemble credit in their nature and behaviour, thereby carrying the associated risks that credit entails.

'BNPL looks like credit, it acts like credit, it carries the risks of credit,' Mr Jones said.

Treasurer Jim Chalmers echoed Minister Jones' sentiments, acknowledging the significant role of BNPL in the economy while expressing concerns about the lack of effective checks and balances.

In an interview with ABC News, Chalmers stated, 'They've got a role to play, but we need to make sure that we manage the risks.'

The decision to regulate BNPL as a credit product primarily aims to address marketing risks and safeguard individuals who are most vulnerable to its adverse consequences. This includes women, First Nations communities, and those with lower incomes.

One area of concern that requires attention is the potential issue of individuals simultaneously managing multiple BNPL accounts.

View attachment 20338

This move is aimed at managing risks associated with BNPL services. Credit: Unsplash/simonkadula.

Despite the implementation of tighter regulations, the government does not intend to eliminate these services completely.

Treasurer Chalmers clarified this stance by stating, 'We want people who can afford to participate in Buy Now, Pay Later to be able to access it, but there needs to be the right rules and regulations around it.'

The recent regulatory changes have been met with a positive response from key industry players such as Afterpay and Zip.

Afterpay, in a statement, expressed its support for the new regulations, considering them a 'strong first step' that would bring benefits to both consumers and businesses. The company emphasised its commitment to collaborating with the government, consumer groups, and other stakeholders in order to refine the details of the regulations.

Peter Gray, the co-founder of Zip, also welcomed the regulatory measures, stating that they strike a balance between safeguarding consumers from potential harms, instilling confidence in industry stakeholders, and fostering competition and innovation.

Key Takeaways

• The Australian government has implemented stricter regulations for Buy Now, Pay Later (BNPL) services, treating them as credit products.
• This move comes in response to concerns about the risks posed by BNPL, such as high levels of debt and difficulty in managing repayments.
• While aiming to protect vulnerable consumers, the government also acknowledges the importance of allowing access to BNPL for those who can afford it, emphasising the need for balanced rules and regulations.

Earlier this year, a survey shed light on a concerning trend among BNPL users, revealing that a significant portion of them are struggling to meet their repayment obligations. As a result, these individuals are experiencing a surge in debt and increased financial stress.

Jessica, a single parent, found herself compelled to turn to the popular BNPL provider Zip in order to cope with the rising cost of living during the holiday season. Explaining her situation, Jessica shared that while some of her purchases were impulsive, they stemmed from a prolonged period of deprivation.

She admitted to succumbing to the allure of being able to finally afford certain things, even if it meant taking some risks. 'I played with the devil a bit,' she said.

Jessica's story resonates with many Australians who find themselves grappling with the ongoing cost-of-living crisis, indicating that the challenges faced by BNPL users are reflective of broader economic struggles within the country.

Unfortunately, it appears that these difficulties are not going anywhere anytime soon.

View attachment 20339

BNPL services will be required to meet modified responsible-lending obligations, which the government said would be scalable to the risk level of the product. Credit: Unsplash/Jonasleupe.

If you're currently—or considering—using Buy Now, Pay Later services, it's absolutely crucial to stay informed about the recent regulatory changes and be mindful of the potential risks involved.

Just like a credit card, the BNPL system can easily become overwhelming if you're not careful with your spending habits. It's important to exercise financial wisdom and make informed decisions to avoid any unforeseen challenges down the road.

Now, we're curious to hear your thoughts on this. What do you think of these regulatory changes? Do you happen to own a credit card, and if so, do you use it regularly?

Do you believe that treating BNPL as credit services will ultimately assist more people, or do you think it could potentially encourage excessive spending? Don't hesitate to share your insights and join the conversation in the comments section b