Missing Meals to pay off BUY NOW PAY LATER debts
|Buy Now Pay Later users are missing meals and essentials to pay their debts, more government data has confirmed. |
Services like Afterpay, ZipCo, Humm, LayBuy and others are leading young people (in particular) into financial hardship, despite not being classified as credit providers. There are reportedly 9.1 million active BNPL accounts in Australia.
21% of BNPL users rack up late fees, ASIC has reported while 20% of users have gone without essentials (like meals) and 15% have taken out an additional loan to pay off BNPL debts. Over 70% of BNPL users who pay their BNPL bills with a credit card are paying interest on their credit card debt says ASIC.
Yesterday, new advice from New Zealand’s Ministry of Business, Innovation and Employment (MBIE) confirms the ASIC findings and warns that “lack of affordability assessments” by BNPL providers such as Afterpay make accumulating debt too easy. Between 9 and 15% of BNPL are missing payments in NZ.
“Consumers are going without essential goods in order to make their BNPL payments and defaulting on household bills, credit card and home loan repayments,” the MBIE has reportedly found.
“There is also increasing evidence of BNPL customers using credit to make their BNPL repayments.” Afterpay enjoys 40% of NZ’s Buy Now Pay Later market and, along with other providers, has been warned they could be forced to comply with responsible lending rules by NZ’s Commerce and Consumer Affairs Minister David Clark.
“Breaking down the cost of purchases into little pieces and providing (interest-free) credit to consumers is clearly risky for some users,” said Jason Bryce, finance journalist and spokesperson for the CashWelcome.ORG campaign.
“The safest way to buy goods and services is to pay up front with cash,” said Mr Bryce, “but BNPL services like Afterpay require merchants to spread their fees across all sales, effectively discriminating against cash users.”
For example, Brisbane-based BNPL provider Payo’s Terms and Conditions tells merchants:
“You must not inflate your cash price to our customers.”
Payo also insist that no merchants give cash buyers “no further discount.”
However, Payo, Afterpay and other BNPL provders charge merchants relatively high fees.
Afterpay merchant fees are $0.30 plus 3% to 7%, says CHOICE.
“Why can’t a retailer offer discounts to their cash customers of at least 3% to 7%?” asked Mr Bryce.
“Why are responsible cash users subsidising these huge Buy Now Pay Later companies?”
Treasurer Josh Frydenberg is currently considering a review of payment systems regulations by lawyer Scott Farrell.
CashWelcome.ORG is a campaign giving a voice to the millions of Australians who trust and rely on cash, supported by the cash industry. Find Out More