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A boom in the use of buy now, pay later products has prompted warnings of people falling into financial hardship and growing calls for the sector to be regulated. Buy now, pay later companies such as Laybuy and AfterPay allow online shoppers to buy goods on credit and pay off the balance over four payments. These types of transactions grew by almost half in the first quarter of 2021, compared to the same period last year.
Nine to Noon has requested a copy of briefing document from the Ministry of Business, Innovation and Employment to the Commerce and Consumer Affairs Minister David Clark, warning that these products are making the accumulation of debt easy. These products don't charge interest to the consumer, rather retailers pay the provider. Because these products don't charge interest, they don't fall under the Credit Contracts and Consumer Finance Act. Consumer groups are now calling for the buy now, pay later industry to be regulated like other money lenders.
The Commerce Minister is weighing up possible regulation. Kathryn speaks with Consumer NZ's head of research is Jessica Wilson and KPMG's head of banking and finance John Kensington.
