They’re pitched as an easy, interest-free way to pay off a spot of shopping, but there’s pressure for regulation of popular buy-now pay-later (BNPL) services in New Zealand.
BNPL providers like Afterpay and Laybuy allow consumers to pay for goods in portions, spreading the payments over a number of weeks.
The Covid-19 pandemic’s seen the services take off, after almost doubling their number of customers in New Zealand in 2019.
Kate Reddington, from the Commission for Financial Capability’s ‘Sorted’ programme, says it can seem like a good deal on the surface, but there are risks.
“Particularly because there's multiple providers of buy-now pay-later, people can sign up to multiple payments, and their debts can potentially really spiral out of control and that's when people get into trouble and that's what we're really worried about,” she told 1 NEWS.
The unregulated market’s quadrupled in the UK, prompting an urgent crackdown over concerns people aren’t treated fairly and can sign up even if they can’t afford it.
Currently in New Zealand, most BNPL services undertake some customer credit checks and have caps on late payment fees, but there’s concern the measures don’t go far enough.
Afterpay, one of the largest BNPL services, said in a statement companies here are currently working on a code of practice, and that the industry’s efforts to self-regulate should be supported.
A spokesperson for the Ministry of Business, Innovation and Employment says it want to ensure there are consumer protection measures in place for BNPL services, and is monitoring the code of practice before “considering next steps to progress work in this area.”
“The government does have new powers under the Credit Contracts and Consumer Finance Act to extend legal requirements to BNPL schemes, which can be used if industry-led measures are unsatisfactory,” the statement read.
There is advice for Kiwis on buy-now pay-later services at sorted.org.nz.