Nov 16 (Reuters) - One in five consumers using
buy-now-pay-later (BNPL) services were missing payments and some
were facing financial hardship, Australia's corporate regulator
said in a highly anticipated report on Monday about the booming
The report by the Australian Securities and Investments
Commission (ASIC) fell short of calling for regulation, but
warned that some consumers were cutting back on or going without
essentials and even taking additional loans to make payments on
"Buy now pay later arrangements are clearly popular as a
payment method. While working for the majority of users, some
consumers are suffering harm," ASIC said.
Even before this year's coronavirus-driven shift online,
nearly a third of Australia's adult population had a BNPL
account last June, according to the report.
Since then, BNPL firms have seen an explosive rise in user
growth and greater investor interest with Afterpay Ltd
becoming one of Australia's 15 most valuable companies.
However, growth of the largely unregulated industry has also
led to increasing scrutiny.
Australia's central bank is reviewing the BNPL
'no-surcharge' rule, while UK's Financial Conduct Authority is
looking at unsecured credit and is expected to release a report
in early 2021.
ASIC's latest report is a follow-up to the one in 2018 that
looked into consumer harm and potential regulation of the
During 201819, missed payment fee revenue for six BNPL
providers under the review climbed 38% to more than A$43 million
RBC Capital Markets said Monday's report showed that "most
of the metrics have not deteriorated versus the initial report".
ASIC said data between January and June showed a decline in
the number of transactions involving a missed payment.
Despite some of the findings, RBC does not expect any
adverse impact to Afterpay or its smaller rival Zip Co Ltd
. The companies in separate statements said they
welcomed the report.
($1 = 1.3716 Australian dollars)
(Reporting by Shruti Sonal and Nikhil Kurian Nainan in
Bengaluru; Editing by Lincoln Feast and Amy Caren Daniel)