ASIC puts spot­light on buy now pay later in­dus­try

Wangaratta Chronicle - North East Regional Extra - - NEWS -

ASIC has re­leased its first re­view of the rapidly grow­ing buy now pay later in­dus­try. The re­view of this di­verse and evolv­ing mar­ket has found that buy now pay later ar­range­ments are in­flu­enc­ing the spend­ing habits of con­sumers, es­pe­cially younger con­sumers. A buy now pay later ar­range­ment al­lows con­sumers to pur­chase and ob­tain goods and ser­vices im­me­di­ately but pay for that pur­chase over time. While some buy now pay later providers of­fer fixed term con­tracts up to 56 days for amounts up to $2000, other providers of­fer a line of credit for amounts up to $30,000. ASIC found that the num­ber of con­sumers who have used buy now pay later has in­creased five-fold from 400,000 to two mil­lion over the fi­nan­cial years 2015-2016 to 2017-2018. The num­ber of trans­ac­tions has in­creased from about 50,000 dur­ing the month of April 2016 to 1.9 mil­lion in June 2018. At 30 June 2018, there was $903m in out­stand­ing buy now pay later bal­ances. ASIC Com­mis­sioner Danielle Press said although the 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. “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,” she said. “We found that buy now pay later ar­range­ments can cause some con­sumers to be­come fi­nan­cially over­com­mit­ted and li­able to pay­ing late fees.” One in six users had ei­ther be­come over­drawn, de­layed bill pay­ments or bor­rowed ad­di­tional money be­cause of a buy now pay later ar­range­ment. Most con­sumers be­lieve that these ar­range­ments al­low them to buy more ex­pen­sive items than they would oth­er­wise and spend more than they nor­mally would. Providers also use be­havioural tech­niques which can in­flu­ence con­sumers to make a pur­chase with­out care­ful con­sid­er­a­tion of the costs. “The ex­po­nen­tial growth in this in­dus­try, along with the risks we have iden­ti­fied, means this will re­main an area of on­go­ing focus for ASIC, Ms Press said. “One area we will be tar­get­ing is where con­sumers are pay­ing more than they need to for us­ing a buy now pay later ar­range­ment.” AASIC’s Mon­eySmart web­site at www.mon­eysmart.gov. au ex­plains how buy now pay later ser­vices work and how con­sumers can avoid get­ting into fi­nan­cial trou­ble when us­ing them.

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