ASIC has released Buy now pay later: An industry update (Report 672) which contains the latest data on the buy now pay later industry.

ASIC’s current review considered aggregated data from six buy now pay later providers and four major financial institutions. The buy now pay later providers ASIC reviewed were: Afterpay, BrightePay, Humm, Openpay, Payright, and Zip Pay.

ASIC says the total amount of credit extended in the buy now pay later industry has almost doubled in 12 months. 

ASIC notes that while the buy now pay later providers in its review do not charge interest, most do charge missed payment fees when a consumer misses a payment.

Its consumer research indicated that 21% of buy now pay later users who were surveyed missed a payment in the last 12 months.

ASIC also notes that as part of their business models, all the buy now pay later providers in its review charge fees to their partnered merchants. The size of the merchant fee varies between different providers and
merchants. Providers generally contractually prohibit merchants from increasing the cost of goods and services to the individual consumer where their buy now pay later arrangement is used (also known as ‘merchant surcharging’ or ‘surcharging’).

ASIC says that despite the contractual prohibitions in place, it is still possible for surcharging to occur, and for consumers to be charged more when using a buy now pay later arrangement.

From October 2021, the design and distribution obligations will apply to buy now pay later arrangements.

The Australian Finance Industry Association (AFIA) has confirmed the Buy Now Pay Later Code of Practice will be published and become effective from 1 March 2021.

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