Australia to regulate buy-now-pay-later sector

The Australian government said on Monday it would introduce laws that will consider buy-now-pay-later (BNPL) services as a credit product in a bid to protect consumers in a largely unregulated industry.

BNPL companies typically offer on-the-spot interest-free short-term loans with minimal credit checks that spread payments and are largely used by cash-strapped people taking debt, sometimes more than they can afford to buy.

The absence of interest charges has exempted them from consumer credit regulation and the sector has seen its business surge during an online shopping frenzy spurred by COVID-19 stimulus payments and ultra-low interest rates.

But concerns about repayment have been rising as Australia battles high inflation, which now sits at near 30-year highs.

The services will be required to have a credit licence, make allowances for financial hardship and minimum standards for conduct that could subject them to the same laws as credit card providers, Financial Services Minister Stephen Jones will say in a speech on Monday, local media reported.