Afterpay Day: You’re paying for it
Afterpay Day is a promotion of buy now pay later debt running from Thursday 17th to the 20th March. Consumers can win prizes, get discounts or exclusive ‘drops’ if they choose to BNPL debt rather than paying outright for purchases.
Afterpay and other BNPL lenders charge retailers 4 per cent (or more) and ban them from recovering the fee from consumers.
Yesterday, the Buy Now Pay Later Code Compliance Committee (CCC) of the Australian Finance Industry Association issued a 10-page report covering its’ first year of operation.
“The code compliance committee’s report is disappointing,” said leading Australian banking industry newsletter, BankingDay.com.
” … it did not report on any issues or initiatives. Nor did it use its powers to conduct any investigations.
“Given the industry is so controversial, it should have done more,” said BankingDay.com
Afterpay, Brighte, humm BNPL, Klarna, LatitudePay, Openpay, Payright and Zip are signatories to the BNPL Code of Conduct and represent 95% of the BNPL market in Australia.
ASIC has reported that 21 per cent of BNPL users rack up late fees and 20% of these people have gone without essentials (like meals) to pay their debts. 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 said ASIC.
Buy now pay later services are are funded from merchant fees and late fees and are not surcharged at the point of sale.
It looks like buy now pay later debt is being marketed to young people (mainly) and being paid for by all consumers. People who pay with cash, debit cards and credit cards appear to be subsidising the selling of credit to young people.
Buy now pay later should be subject to consumer credit protection laws, like other forms of debt. Cash users should not be penalised for paying for goods and services up-front.