‘Buy now, pay later’ stars like Afterpay, Zip don’t need regulation, Senate inquiry into fintech says
Consumers don’t need to have legal protections when they use “buy now, pay later” services like Afterpay and Zip, because those companies can just self-regulate, according to a Senate inquiry into fintech.
With more consumers shopping online during the COVID-19 crisis, millions of Australians are turning to buy now, pay later services as an alternative form of debt to credit cards.
Platforms like Afterpay and Zip have been especially popular with millennials who may not be eligible for credit cards.
Some buy now, pay later services, such as Afterpay, don’t even require customers to do credit checks — people simply sign up and spend.
Afterpay argues no credit checks are needed because the company caps late fees and stops consumers from spending once they fall behind on a payment.Consumer advocates had wanted these companies to be regulated under national consumer credit laws.
This would have ensured they face the same legal obligations as other financial services providers like credit companies, and that consumers are protected under those laws.
But the Senate Select Committee on Financial Technology and Regulatory Technology, chaired by Liberal senator Andrew Bragg, disagreed that regulation was the best way forward.
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