Tue Sep 24 03:21:47 UTC 2024: ## Buy Now Pay Later Boom Raises Concerns as Government Cracks Down
**Sydney, Australia** – The popularity of Buy Now Pay Later (BNPL) services in Australia continues to soar, with two in five Australians using them in the past six months. While convenient for consumers, concerns are growing about the potential for overspending and debt accumulation, particularly among younger generations.
A recent survey found that Gen Z (59%) and millennials (55%) are the most frequent adopters of BNPL services, with an average debt of $1,052 per user. To address these concerns, Afterpay is introducing a new spending cap feature, allowing users to set a limit on their purchases starting late next year.
Currently, Afterpay users are not required to undergo a credit check and their borrowing does not impact their credit score. However, missed payments and insufficient funds can affect their spending limits. A separate survey revealed that 20% of BNPL users experience late fees every month.
The Australian government is taking steps to regulate the industry, aiming to protect vulnerable consumers. New legislation will require lenders to conduct thorough background checks and obtain credit licenses. This move comes in response to concerns that BNPL providers have not been adequately regulated under existing consumer credit laws.
The government’s proposed bill also outlines fee caps for credit lender users, aiming to balance the benefits of low-cost credit with the need for consumer protection. The Australian Securities and Investment Commission has acknowledged the potential benefits of BNPL while expressing concern about missed payment fees and financial stress experienced by some users.
Assistant Treasurer Stephen Jones emphasized the government’s commitment to balancing consumer protection with preserving the benefits of accessible credit. The legislation aims to regulate BNPL in a proportionate way, ensuring credit is only provided when it is affordable and meets the consumer’s needs.
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