Nov 16 (Reuters) - Australia's corporate watchdog said on
Monday that one in five consumers engaged in buy-now-pay-later
(BNPL) transactions were missing payments and some were facing
financial hardship, as part of a wider report published on the
Some consumers who use BNPL arrangements were cutting back
on or going without essentials, or taking out additional loans
to make their BNPL payments on time, the Australian Securities
and Investments Commission (ASIC) said it found in its research.
Australian BNPL firms, including heavyweight Afterpay Ltd
, have benefited from a shift to online shopping during
the coronavirus crisis in countries including the United States,
where state aid has also boosted retail sales.
The boom in the industry has also led to increasing scrutiny
in the so far largely unregulated sector.
ASIC's latest report follows an earlier one released in
November 2018, looking into potential implications for
regulation of the sector.
During 201819, missed payment fee revenue for all BNPL
providers in the review was over A$43 million ($31.35 million),
up 38% from the previous financial year, while the number of
BNPL transactions nearly doubled to 32 million in 2018-19 from
16.8 million in 2017-18, ASIC said.
"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 added.
The regulator said changes were on the horizon that would
impact the industry, with design and distribution obligations
coming into effect in October next year.
Afterpay and smaller peer Zip Co Ltd said in
separate statements they welcomed the report, with Afterpay
adding it would participate in the Australian government's
upcoming review of the regulatory architecture of the payments
($1 = 1.3716 Australian dollars)
(Reporting by Shruti Sonal in Bengaluru; Editing by Lincoln