A rose by any other name: Where is Australia on BNPL as credit?
.jpg)
More of us are opting for the Buy Now, Pay Later (BNPL) option – it’s simple to sign up to and allows access to easy credit. But not everyone’s benefiting from the newest in fintech innovation.
So, should there be tighter rules around BNPL services?
The Financial Service Minister, Stephen Jones seems to think so. On Monday 21st, Jones announced the Australian government’s intention to publicly consult on improving the regulation of BNPL in Australia with suggestions expected to be implemented into law early 2023.
More users and money moving through BNPL services
The Reserve Bank of Australia recently crunched the data on the increased use of BNPL services and reported that consumers spent $16 billion on BNPL during the 2021-22 financial year—equivalent to roughly 2% of card purchases.
A lot of the spending is being done by younger people. In fact, surveys conducted by the Australian Finance Industry Association (AFIA) found that almost half of those using BNPL as of March 2022, were aged between 18 to 34. This is further backed by the RBA’s research that found BNPL is most popular with under 35s.
The RBA also found a further increase of 5 million to 7 million users of BNPL related services as of June 2022. So it seems to be on the rise.
Is BNPL the way? Or is it a credit card by any other name?
As we can see from the data, younger consumers are increasingly moving towards a higher usage of BNPLand, whilst most can pay off the money in time, others may not have the same financial management skills to keep up with their payments.
So with the regulatory challenges of emerging financial products, should we be treating BNPL more like credit? Or, as Jones says, “If it looks like a duck, walks like a duck, sounds like a duck, it’s a duck”.
This is not to say we should stay clear of the service, however.
Just like credit cards, BNPL is simply a financial tool that, like any other, should have regulations in place to protect consumers. In this way, BNPL can continue to be used by responsible users while regulation can protect the less experienced money managers among us.
Want to start using a BNPL service, but not sure which is the right one for you? Check out our how to, tips, and comparisons guide here.
^See information about the Mozo Experts Choice Buy Now Pay Later Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.