Zip throws down challenge to Afterpay and ‘outdated’ credit cards amid Senate inquiry

Buy now, pay later (BNPL) service Zip has described the current credit card model as ‘outdated’ compared to BNPL products such as their own, which they argue offer a ‘fairer’ payment alternative for Australian consumers.

The comments from Zip CEO and Co-Founder, Larry Diamond, came amid a call for new regulations on the BNPL industry from the company, including conducting more stringent financial checks on customers and providing greater product transparency.

“When correctly regulated, BNPL products offer a powerful tool for consumers to take control of their finances,” said Mr Diamond.

“Compared to the outdated credit card model, these products provide a better, fairer alternative with simpler product constructs, interest-free terms, lower fees and faster repayment times.”

Among the other recommendations proposed, the fintech has advocated that all buy now, pay later lenders:

Verify customer income and ensure that now more than 10% of their customers post-tax income is directed to repayment commitments

Ensure that repayments are made with a bank account and not a credit card

Cap late fees to either $10 per month or 10% of the aggregate monthly repayment due (whichever figure is lowest)

To read more, please click on the link below…

Source: Zip throws down challenge to Afterpay and ‘outdated’ credit cards amid Senate inquiry